Long-Term Care Insurance Helps You Plan For The Unexpected
You have probably heard the famous saying, “Nothing is certain except death and taxes.” Since death is inevitable, most of us have put some careful thought into how our death will impact our loved ones, taking careful steps to make sure we alleviate stress in the closing of our affairs and to make sure that we leave the people we care about whatever resources we have at our disposal to improve their lives upon our passing.
While death is certain, the quality of your life before you die is not as predictable. Some people spend years requiring special medical care and assistance with personal care routines. The expenses associated with long-term care can quickly wipe out all the retirement savings and investments you hoped to leave as an inheritance.
Planning for the Unexpected
Most people plan out their retirement based on conservative and controlled expenses. As people near retirement age, they sell large houses and move into homes that are easier to maintain to help lower their monthly rent or mortgage payments. By intentionally decreasing expenses, most people can comfortably enjoy their retirement years. However, if an unexpected expense undermines their carefully thought-out budget, they might not be able to follow this plan. Since two-thirds of people eventually require long-term care, a large expense impacting your retirement isn’t just possible, it is extremely likely.
Consider the Averages
Long-term care is exorbitantly expensive. According to the costs of care analysis provided by the U.S. Department of Health and Human services, the average cost for nursing-home care in a semi-private room is $6,235 a month. This means that your shared room in a nursing home will cost you the same amount as paying the monthly mortgage on a one-million dollar home. If you would prefer a private room, that adds an extra $730 a month. Even if your health fares better than most and you are able to maintain your independence with a little outside help in an assisted-living facility, your monthly expenses will average $3,293 a month for a basic single-bedroom unit.
Costs like these are hard for even the most financially responsible planners to prepare for. However, when you purchase long-term care insurance, you know exactly how much to budget for every month to avoid a scenario where your end-of-life care puts a burden on your family that your personal savings can’t alleviate.
The U.S Department of Health and Human Services has also calculated the average cost of long-term care insurance, and it is much more reasonable, coming in at $2,207 a year — one-third of the cost of a single month of nursing-home care. Purchasing long-term care insurance before you ever require assistance can save your family hundreds of thousands of dollars and be the difference between your leaving behind an inheritance or costing your family their life’s savings.
Long-Term Care Insurance Also Covers At-Home Care
Most people would prefer to be cared for at home. While aging at home may be more comfortable, it is not any cheaper. In-home health-care costs for a person requiring round-the-clock care can be even more expensive than nursing-home care. Fortunately, long-term care insurance also covers the expenses associated with being cared for at home.
According to the Wall Street Journal article, “Long-Term Care Insurance: Is It Worth It?” by Leslie Scism,
“For the majority of people, buying a long-term-care policy “is all about care at home,” says Jesse Slome, executive director of the American Association for Long-Term Care Insurance. In 2012, the latest year for which data are available, roughly half of newly opened claims were for home-based care, according to the trade group. Nursing homes represented 31% of such new claims, and assisted-living facilities represented 19%.”
If your desire is to be cared for in your home with the support of your friends and family, a long-term care policy will insure that they have the help they need to care for you properly.
A Plan That Pays Even If You Don’t Require Care
If you are still optimistically hoping to be among the one-third of Americans who don’t require long-term care, it may be hard to stomach paying premiums on a long-term care insurance policy that might never be used. You can mitigate the risk of purchasing a policy that doesn’t pay out for your care by looking into combination policies that combine a life-insurance plan with a long-term care plan. Combo policies like these are growing in popularity because they allow money not spent on long-term care to be paid out at the end of your life, instead.
Like all insurance policies, it is important that you purchase combo policies from a company you can trust who is willing to explain all of the intricacies of the plan to you in language that is easy to understand. Any time you combine benefits in an insurance plan, the policy gets more complicated. But if you have an insurance agent you trust there is no reason to be intimidated.
Delaying Decisions Creates Unnecessary Risk
The most important thing is to make a decision about long-term care one way or another. Most people understand that long-term care insurance will benefit them greatly, and they intend to purchase a long-term care plan, but they put off the decision, believing they have more time. This state of mind is perfectly displayed by a Wall Street Journal reader Susan E. Voss who wrote in to the newspaper and was included in their article, “Long-Term-Care Insurance : Readers Weigh In,”
“In the past two years, I have dealt directly with long-term-care insurance that both my late mother and late aunt had. In both cases, it was a godsend and paid without problem. I turn 60 this year and my husband is 66 and we often discuss whether we need to take the plunge to protect our kids from having to deal with issues as we age. I don’t want to put our family in a place where they are constantly worrying about us and our needs. It’s not a fun topic!”
While Voss clearly understands the benefit of long-term care insurance and expresses her intention to protect her children from the burden of caring for herself or her husband, she had not, at the time of writing in for the article, taken any steps to protect her assets and her children’s well-being. Good intentions don’t count for much if you fail to take action before you require care. None of us can predict when we may need long-term care, but we can be sure that we are prepared for the moment if it comes, by purchasing long-term care insurance in advance.
