Is Buying Long Term Care Insurance
the Right Choice for You?
Request a and get a free copy of "Insiders
Guide to LTCi Insurance." )
People often base their
decision about LTCi on things they have heard or on experiences
their families have had. The former may be irrelevant, based on
rumor or misconception; experiences, while relevant, could turn
out differently today and in the future because laws regarding nursing
home care and Medicare have changed. Here we will identify the most
common opinions—usually erroneous—about LTC and help
you to decide if the insurance is right for you.
I am a very
healthy person. I have never been hospitalized and have rarely
been sick. I'll probably just die in my sleep and never need Long
As nice as that sounds,
statistics show us that six of ever ten people will need some
form of extended care before they die. Cognitive diseases like
Alzheimer's can creep up on you, resulting in a long, slow decline.
Once diagnosed, you are not eligible for any kind of insurance
and your family has to shoulder the burden. The odds of never
getting sick or needing care during your senior years are very
We have money
put aside. We could pay for the cost of care ourselves if we ever
That's great, and
it may even be true. If you are a millionaire and could buy
the nursing home, you don't need insurance. However, if your
assets are in the range of a few hundred thousand, consider
that the national average for nursing home care is now $72,000
per year. Very few nursing homes anywhere are below $60,000
per year. How long would your savings last at that rate? And
what will your spouse live on once the money is gone to care
My father just
transferred all of his assets and let Medicaid pay the bill. I
plan on doing the same.
The government has
changed the rules regarding the use of Medicaid to prevent people
from doing what your father did. It is still possible, but if
the government thinks you transferred assets for that reason,
they can actually look back ten years and penalize you accordingly.
In any case, they currently look back three years, and as of
2011, will be looking back 5 years. If any assets were transferred,
including money given as "gifts," you will be ineligible for
Medicaid for a penalty period equal to the value of the assets.
Additionally, transferring assets to children may expose them
to capital gains taxes and make your grandchildren ineligible
for financial aid for college.
that Long Term Health Care Coverage is not that affordable.
It does get more
expensive as you get older. Also, if you income is limited to
social security alone, and you have no liquid assets, you would
have difficulty paying for it. In general, however, if LTCi
is purchased by the time you are in your mid-sixties, the annual
premium for two people will be about half of what it would cost
you to keep just one person in a nursing home for one month.
The only people who should
NOT purchase LTCi are those with extremely low income and no assets.
These individuals will be eligible for Medicaid. The government
will take your social security check, your home, and your life insurance.
Those with a moderate
income who cannot afford the premium may want to discuss LTCi with
the family. If you have several children, they may be willing to
contribute to the premium in exchange for preserving the family
home and protecting your modest retirement. In doing so, they protect
themselves as well, ensuring that they will receive your life insurance
and any other assets you intended to pass on. Furthermore, the protection
will give you the right to choose the kind of care you want.
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