8. Do I really need
long-term care insurance?
Surprisingly, long-term care insurance is NOT for
everyone. Before purchasing long-term-care insurance, of the following:
- Excluding your home, do you have assets to protect? If so, a properly designed
long-term care insurance plan will help you preserve them. You might have significant
investments and feel you could afford to pay for your own care; but it may surprise you
when you weigh self-insurance vs. using long-term care insurance. (Use our Income/Asset
Projector to see how you would fare.)
- Affordability. Long-term-care insurance can be expensive. One way to determine how much
you can afford in premiums for this valuable protection is to add all of your liquid
assets, plus one year of income. (If you are single, widowed, or divorced use 1/2 of your
home value.) Multiply that total times 1.5%, which will equal the maximum premium that you
should consider. Exceptions to this rule are if you are over 75 or faced with health
challenges, in which case you should use up to 2.5%.
Click here to use our Maximum
premium calculator:
As with most rules, there are exceptions; e.g., a child may elect to
purchase coverage for their parents to help preserve their lifestyle and freedom of
choice.
Here's a little questionnaire to consider as you contemplate your
long-term care insurance needs.
- Excluding your home, do you have substantial assets to
protect? Some people consider self-insuring.
- Would you want to spend down your estate value by using a
substantial portion each year? What effect would this have on your lifestyle and the
lifestyles of your loved ones?
If you are living alone, the probability of needing care at home or in an
institution increases.
- Do you have family or friends who could and would be willing
to provide assistance?
- Would your children be able to provide care for
you? Would
this create a hardship on your children and their families? Do you really want to
move in with your children?
If you are married and think that your spouse can take care of you, ask yourself
these questions.
- Is your spouse strong enough to physically pick you up in
order to help you bathe, dress, turn over in bed or walk?
- If your spouse needs help, can you financially afford the
cost of care? (Home health care RN's average $75 per hour and home health care aids
average $16.00 per hour)
In 1993 President Clinton signed the OBRA law,
requiring States to recover nursing home and long-term care Medicaid expenses from the
estates of the recipients.
Do you know that the State can place a lien on any of your real or personal
property, including the home that you held in your own name?
Your personal attitude will also determine if LTC insurance is right for you.
-
With regard to Medicaid (which is normally the consumer's last resort), how do you feel
about depleting your reserves in order to even qualify?
-
When you are on Medicaid, your caregiver and facilities are chosen for you – you
have no voice in the decision making. Would this matter to you?
-
Do you think long-term care insurance could provide a solution to your retirement needs?
-
Due to modern medicine, it is projected that people will live 8 years longer than their
parents. Are you prepared for this?
How will you pay for your long term care expenses?
Do you have a history of longevity in your family?
Do you believe long term care insurance would be a benefit to you?
Do you think you could deplete your savings if there was a long-term care need?
Do you think long-term care expenses can be one of the greatest financial risks one may
face?
Do you think long-term care insurance is one solution to the increasingly growing cost
of long-term care?
Do you have a family history of medical problems?
You might want to print the above questions and
compare them against the responses and/or feelings you will have towards long-term-care
after you have learned a bit more about the issues involved.
|
