Is Long-term-Care insurance worth it?
One of the most widely held beliefs is that your health insurance or Medicare will pay for your long-term care (LTC), but this is NOT the case. In section 2, page 12 of the 2020 Choosing a Medigap policy, it states “Medigap policies don’t cover long-term care (like nursing home care or care you receive at home).” LTC insurance steps in if you develop a health condition that requires you to need care or supervision. This includes home health care, assisted living and nursing home care, and adult daycare. Without LTC insurance in place, you may burn through your life savings or have no choice but to rely on a family member.
LTC insurance is worth it because it protects your assets, spares your family from financial and emotional stress, and puts YOU in control of your health decisions.
What are my options for LTC insurance?
The LTC insurance market has evolved over the past few years. Today we have many different options for insurance to cover the cost of a long-term care event. There is traditional LTC insurance, asset based LTC insurance, and stand-alone homecare policies that insure almost anyone that wants the coverage can get it.
The asset-based insurance is the most popular today and offers your loved one coverage if you pass away, and peace of mind that if you need care it will be covered.
Photo courtesy Marcelo Leal …unsplash.com/@marceloleal80
How much does long-term care cost?
According to the 2020 cost of care survey by Genworth, the average cost of care in Memphis for nursing home care is $85,000 a year. Homecare and assisted living care are just over $50,000 a year. Of course, depending on the facility or the amount of home care, these amounts could vary.
How much does LTC insurance cost?
According to the American Association for Long-term Care Insurance, a couple in their mid 50s should expect to pay about $3,500 a year for traditional coverage. By the time they are 85, they will have $765,000 in their pool of money for long-term care. For what you’re paying, that’s pennies on the dollar.
However, asset-based coverage works a little different. You can reposition some of your assets and get leverage from an insurance company to cover the cost of LTC, and if you’re lucky enough to never need care it will pay a beneficiary a death benefit.
In my 13 years as a long-term care specialist, I have seen many families benefit from LTC coverage. It is a very important part of financial planning.
These are just a few of the most asked questions about long-term care insurance. For a personalized assessment of your individual options, please contact me and I’d be happy to meet with you by zoom, phone, or in person in a socially distanced appointment.