Long term care insurance companies would like you to believe that you will loose everything if you face a long stay in a nursing home. While extended care can drain some of your finances it is important to understand the truth about your need for long term care and what LTC insurance actually does before you consider such a policy.
Many long term care insurance providers exaggerate the length of time the average person may spend in a nursing home. The truth is, for men over sixty-five, two out of three will never enter a nursing home. Only one out of three women over sixty-five will seek nursing home care. For those who do enter a nursing facility the average stay is around a year and half. Only ten percent of nursing home residents stay for more than three years.
If you purchase a long term care insurance policy, it is vital that you understand what long term care costs your policy will cover. In the 1990s many people had policies that paid for little or no long term care costs. For some this was due to the fact that they purchased nursing home insurance but received at-home care instead. For others benefits expired before their care needs ended.
Long term care insurance is expensive. When purchasing a policy, make sure your premium cost is no more than five percent of your monthly income. Keep in mind that your income will drop after retirement.
Many people let their long term care insurance policy expire when they can no longer afford the premium. If this occurs, you will mos tlikely lose all of the money you have already paid into your policy and you will receive no benefits.
Before you sign an LTC Insurance policy, consider your other options. For example, if you have sufficient assets you may be able to “self – insure” which means the income from those assets will be sufficient to pay the nursing home costs. If you are married you must remember that these assets will be needed to pay for the nursing home costs as well as the living expenses of the other spouse.
If you do not have sufficient assets to pay for long term care on your own, Medicaid will help.
Levine & Furman, LLC is a member of the American Academy of Estate Planning Attorneys.