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The Long and Short of Long Term Care Insurance

by Don Current on August 23, 2010

Nursing Home Care

photo courtesy Unlrich Joho

Have you given any thought to long term care insurance? As with any insurance product, the best time to think about it is when you DON’T need it.

You’re probably thinking, “Why should I need that kind of insurance? I’m nice and healthy and I’m never going to allow myself to be stuck into a nursing home.”. Well, statistics say that 60% of people over 65 years of age will require some form of long term care. The average annual cost of private nursing homes is now at $80,000 per year. Are you sure you are willing to take that gamble? Many people have seen their hard earned retirement savings waste away due to an extended nursing home stay.

Long term care insurance also can cover the cost of in home care, rehabilitation, and other costs associated with recovering from a major health incident, not just a nursing home stay. Being committed to a nursing home for the remainder of your life is not a requirement of payment.

Keep in mind that as with life insurance, your annual rates will be lower if you get insured earlier in life while you are still healthy. The closer you get to the age where most people have some health issues and are more likely to need the service, the more the cost goes up. In some cases you may not even be able to get coverage. The recommended age to get it is in your early 50’s, but that is not a hard and fast rule. Some people are even getting a policy in place while in their 30’s.

As with any insurance product, do your research. There are many different plans and policies out there to choose from. A few general recommendations are to make sure you get an adequate daily coverage amount which currently would be about $150 per day or more.

The cost of a policy also goes up depending on the length of time it will remain in force during a long term stay. Many policies are in the 3 to 5 year range with the cost increasing significantly the longer you are allowed to stay under care. If you are married, a good plan to look into is one that allows you both to get a certain time of coverage that can be shared between you. For instance some policies will allow both of you to receive 3 years of care, but one of you can could use 4 years of that, and one of you could use 2.

One of the biggest reasons to invest in Long Term Care insurance is for your family. Think of the impact on your spouse if you were to use up your nest egg prior to passing away. Additionally, your children may be impacted if they become involved in caring for and supporting you during this time. Long Term care can have severely negative financial impacts on those around you as well, so consider them in your decision as well.

To do more research and to get cost quotes, you can check out the American Association for Long Term Care Insurance . There is a lot of information on that site which will help you make an informed decision. Kiplinger also has a lot of good advice and information regarding this topic.