Most Popular

Is Long Term Care Insurance Right For You?

A Few Steps to Help You Decide if You Need Long Term Care Insurance

Buying long term care insurance can be confusing.  To help point you in the right direction, we've listed some of the considerations you should look at before making your decision to purchase or not to purchase this type of insurance.

First, we'll answer the question What is Long Term Care Insurance? Basically, it is insurance that pays some or all of the expenses associated with long term health care.  For example, it covers the costs associated with living in a hospice or other elderly care facility.

Long term care insurance can be purchased years in advance, and is not for everyone.  If you have a net worth of between $100,000 and $2 million, you may want to consider purchasing it.  The thought process is that if you have less than $100,000 then you will burn through it very quickly and be eligible for state and federal assistance programs.  And if you have more than $2 million, then you can afford to pay for the long term care itself.  We recommend that if you are in the $1 to $2 million range, that you could probably do without, but it could be a good hedge to protect your assets, as typical annual long term care rates range from between $60,000 and $175,000.

If you decide that long term care insurance is for you, the next step is to decide when to buy it.  Some people buy it in their 40s and some buy it in their 60s.  If you buy the insurance while you are younger, your premiums will be much lower than if you wait until later.  Also, if you wait until you already have some ailments, you are more likely to get turned down for the insurance.  Generally speaking, you will pay about the same amount over your lifetime for the insurance, so buying it early really just spreads out the payments over a longer period.

But remember, buying insurance can be tricky.  And it is difficult to compare policies from one insurance provider to the next.  For example, one policy may cover 80% for 3 years and another may cover 100% for 10 years.  Look closely at the terms and benefits before deciding which policy is right for you.

Get a free long term care insurance quote.

See Also:  Retirement Advice