should I buy long term care insurance?

If you are over age 60 and you have a net worth of between about $50,000 and $2 million, you need LTC coverage. The earlier you purchase it, the lower the premium; each year making a huge difference.

About 78% of households will suffer a long term care need, with an average duration of about three years and costing about $200,000. This cost can only be paid out of pocket, through Medicaid (you have to be effectively broke with extremely little income to qualify), or using LTC coverage. Of course, some conditions can remain for many years or decades. Bottom line: You will die someday. It will either be sudden, or it will be at the end of a long term care scenario.

ADDED:

The accelerated benefit provision of a life insurance policy, while potentially helpful and accessible in certain situations, is not an answer to this need. For this provision to kick in, one must be diagnosed terminally ill within 12-24 months (depending on the policy). Roughly 95% of those receiving long term care services receive predominantly "custodial care." In other words, medical care is not necessarily a significant need in their current condition; there is little chance of them dying anytime soon. Also, the life policy would have to have quite a substantial face amount, as only 50-75% of that amount is paid under the accelerated benefit. For someone of an advanced age, such a policy may be cost prohibitive. A better alternative would be a life policy with a long term care rider. However, most such policies are usually single or limited premium; you'd likely have to have a near six figure chunk of change available to purchase an adequate one. As far as premium increases for LTC policies, premiums have been pretty stable among the stronger companies. In the last decade, there has been a spike in premiums due to updated actuarial data. John Hancock, a true pioneer in the LTC business, finally had to increase premiums a few years ago after decades of touting that they never had. Keep in mind that a company cannot arbitrarily increase rates. Rate increases must be justified by entire classes and approved by each state's insurance commission. As long as you're dealing with a strong company established in LTC, premium increases are not a relevant issue in your decision.

Finally, as Pickle stated, age 60 is an arbitrary figure, but one generally agreed upon by financial experts. While it is not particularly unusual for someone to enter a long term care situation at an earlier age, one must consider the considerable cost of obtaining LTC coverage at an age where the probability of such an occurrence is extremely low; plus, in such a scenario the care would likely be predominantly medical in nature, having funding available through other means (health insurance, medicare).

The grim statistic is that 70% of retirees will need care at some point. It could be long or short term. Most people count on being in the 30% who do not need it, but it remains a concern in the back of their mind, especially if they have some savings for their retirement.

Rather than buying long term care insurance, I recommend that you buy a new life insurance plan that has an accelerated benefit provision, which allows you to access the face amount of insurance while you are still alive, if you need money for health care, it will typically allow 2% of the face amount per month for care.

Unlike long term care insurance, the premiums will never rise, the benefits are payable even if you are cruising the world, as long as the doctors pronounce you as being eligible, and finally, you are guaranteed that the money will not be lost if you never need care. Sooner or later, the benefit will be paid out when you die.

If it's appropriate then yes.

The age of 60 is just someone's opinion. Christopher Reeve was only ~43 when he suddenly needed long term care.

You MAY be better off buying it much earlier and doing a 10-pay option. That would just give you a premium for 10-years. After that the premium can't escalate. Case in point. MetLife just stopped selling long term care so you can be sure without new premiums coming in the door that the policies are going to increase in price at a much faster pace.

And, if you have a net worth of $50,000?....yeah, I don't think so because you're not going to be able to afford it (unless there's more to that story).

Here’s some sound advice about long-term care insurance:

Buy a policy that meets the federal guidelines-that's called a "tax-qualified policy."

Buy a policy that meets your state's guidelines-that's called a "Partnership-qualified policy” (unless you live in CA or NY).

Buy a Daily Benefit that is high enough to cover most of the cost of care in your area.

If home care is important to you, make sure the policy allows for all of the Daily Benefit to be used for care at home.

As a general rule, buy a policy that has a "Policy Limit" that is equal to the amount of your net worth that you want to protect for yourself, spouse, or heirs.

If you’re healthy, you should probably purchase a policy on your own, rather than through your employer.

Lastly, shop around. LTC insurance premiums vary a lot from one company to the next. Your age, health, and choice of benefits have a big impact in determining the premium. Get quotes from at least 9 of the top companies before choosing your policy.

Scott A. Olson

www.LTCShop.com

The day you turn 60, if you can afford it, you should buy it.