Long Term Care and Long Term Care Insurance?

By: Clay Cotton

Copyright (c) 2006 Clay Cotton

Clearly, you don't want to dwell on an image of you or your spouse in a wheel chair or nursing home, but if you don't plan ahead now for such eventualities, you could end up with a crippling financial burden that can strip a family of it's entire nest egg.

Funding for eventual long term care must be planned for far in advance, and long term care insurance seems to be the tool of choice. The alternatives really suck by comparison, so it's time to get going to put your plan in place while you still can.

Fact is, there is nearly a 50% chance that during retirement, due to medical conditions or extended longevity, a person will eventually end up requiring 24-hour skilled nursing care in a long term care facility.

Another astounding fact is that more than 40% of nursing home residents are under age 65. In truth, at age 57, due to advanced Multiple Sclerosis, I myself would be in a care home if my wife would let me out of her sight.

And now let's look at the average length of facility care plus the projected costs for that care…

Long Term Care - It's Leading Causes & Average Lengths of Nursing Home Stays ( from Financial Planning News ):

Alzheimer's: 96 months
Diabetes: 48 months
Pulmonary: 36 months
Cancer: 36 months
Stroke: 21 months
Cardiac:16 months

What happens if you don't have long term care insurance, but you do need this long term care?

• Well, at room rates of $300.00 per day, if care costs inflate at least 5% annually, then 10 years from now, the average, Alzheimer's, long term care stay in a private room could cost a family over $1,400,000.00+

• Do you want your family to pay THAT out of savings? I don't think so, and long term care insurance is clearly the only sensible answer, but is long term care insurance too expensive?

Long term care insurance can cost from under $100/mo. to over $1000/month, so sure, at first insurance can seem expensive, yet consider this:

• At 5% annual compounded inflation, in 10 years, actual real-life care costs could mount to well over anything you might ever put into long term care insurance. Just do the math.

• The annual long term care insurance premium investment is often less than the actual cost of just ONE MONTH in a care situation.

NOTE: Recent industry articles indicate that long term care insurance is such a valuable planning tool that financial advisors may face legal action if they neglect to at least recommend consideration of coverage. (Trusts & Estates Magazine)

Long term care insurance may make good financial sense for you and yours, and the early bird gets the worm, because the lowest long term care insurance prices are locked in at the younger ages and are designed to remain level thereafter.

In any case, each policy is designed to custom fit your circumstances, so you have to work with a trained long term care insurance specialist in order to create the optimal coverage plan. You'll want a multi-company broker who can compare companies and policies to find the best long term care insurance plan for your unique situation.