Clients ask me all the time whether or not they should have long-term care insurance. The answer isn’t always so cut and dry. The important thing is that if people are going to consider it as part of their retirement planning, they need to make a thorough assessment. In the May 2008 edition of Smart Money, Peter Keating makes the argument in favor of long-term care insurance. Take (Long-Term) Care, Smart Money, May 2008.

The most valuable benefit of long-term care insurance is that it gives you options. No one wants to be in a nursing home. “Americans 65 and over have a 40% chance of entering a nursing home at some point in their lives, according to the Department of Health and Human Services.” Sadly, there are many people currently living in nursing homes who might thrive in less restrictive settings if they could afford them. Unfortunately at-home care and assisted living usually require private payment. There are very few public assistance programs, and most have strict income or asset rules. As Peter Keating points out, it’s clear that depending upon Medicaid to pay for long-term care costs isn’t a wise choice, unless it’s the only choice.

Certainly long-term care insurance can be expensive. But consider these eye-opening statistics that Keating points too: Americans rely upon insurance to protect against a 1 in 1,200 chance of your home burning down, a 1 in 240 chance of an auto accident lawsuit and a 1 in 15 chance of a major medical expense. Yet, there is a 1 in 4 chance of needing long-term care. Of course, there’s no way to know what those statistics would be if homeowners insurance wasn’t required by our mortgage companies, and if auto insurance wasn’t required by most states. Some states, Massachusetts included, even require their residents to have health insurance.

If you want to know your long-term care insurance options seek out a long-term care specialist who has a great deal of experience with this type of insurance and can explain all the different bells and whistles. While your financial advisor may be licensed to sell long-term care insurance, this doesn’t mean he or she is qualified to sell it; ask about relevant experience. If possible, also work with an independent professional who can help you look at policies that fit your goals, not one who works for an insurance company who will try to make you fit their available policies.

Bottom line: complete retirement planning should include a consideration of long-term care insurance. A complete consideration, though, includes more than just knowing the price tag.

Tags: , Long-Term Care Insurance, Medicaid, Retirement Planning

This entry was posted on Saturday, May 3rd, 2008 at 8:26 pm and is filed under Long-Term Care Insurance, Medicaid, Retirement Planning. Follow responses to this entry through the RSS 2.0 feed. Leave a response, or trackback from your own site.