What is LTC Insurance
And Why Should I Care?
Long Term Care Insurance is designed to pay for expenses incurred when you are unable to care for your self and need support, whether that’s happening in your own home, an adult day care center, an assisted living facility, or some level of nursing home facility care. No other style of insurance pays for this kind of care and an unfunded long term care episode can ruin even the most carefully constructed financial plan.
Not only can it lead to financial ruin, but it often damages family relationships beyond recovery, to the point where family members stop speaking to each other. That’s something no parent wants.
Obviously, no one wants to need this type of help, but with life expectancies on the rise and access to better health care, more people are living to an age where they’ll need some level of support for a period of time.
Affording Long Term Care is more expensive than most people assume
- Informal care averages $66,629 annually
- Home care costs $58,100 annually
- Assisted living facilities are $57,380 annually
- Nursing home care costs $103,941 annually
National Averages. Source: One America Cost of Care Map. Costs depend on where you live and increase as time goes by.
Health insurance and medicare won’t cover long term care
People fail to realize this type of care isn’t covered by typical insurance. Health insurance or Medicare will pay for immediate care for an accident or illness, but if you don’t recover your independence and still need care OR if you need extended care due to normal aging, dementia or Alzheimer’s, health insurance and Medicare won’t cover it.
If you’re planning on relying on your children for Long Term care, know that you’ll likely also be asking them to quit their job or neglect their family in order to provide your support.
WHAT ARE THE OPTIONS?
Some folks decide to just gamble and live in denial of the risks. In that case, they will spend their assets to pay for care, cutting into their spouse’s quality of life and the inheritance they had planned for the kids.
Or you could buy a long term care insurance policy to lessen the impact and risk. The nice thing about this type of insurance is that you can choose the amount of coverage that is right for you. If you have assets or income that you don’t mind using toward this need, you could buy a smaller policy as a safety net to help with the expense. Or you can buy a policy large enough to cover the majority of the expense, it’s up to you.
Today, there are many types of long term care policies to meet your needs. Some pay a death benefit if you never need care, some will cover you and your spouse, some are paid monthly, and some are one time deposits. Each type has its advantages and disadvantages.