Long Term Care Insurance — An Intelligent Safety Net for Your Retirement


Long term care insurance helps you live well into retirement.  It’s challenging to get, but more important than ever.   We’ll help you understand why in this blog.  In this first post, I’ll give you some perspective that may help you protect your financial future.

I’ve been working as a long term care specialist for more than 20 years.   When I was young, I was a paid caregiver.  I put myself through college by working in a nursing home and as a private aide.  I could see that it was hard on people to get the care they needed, in part because they had to pay me to help them.

That’s what LTC insurance does.  It pays for help when you need help to take care of yourself. 

It’s even hard to get long term care insurance these days.  Fewer insurers are even offering LTC coverage, as Paul Sullivan noted in the New York Times:  “Sales of traditional policies have dropped considerably since their heyday in the early 2000s.  But experts say that ls largely because insurance carriers aren’t promoting a product that works extremely well for consumers but makes little money for insurers and is tricky to manage as companies project over decades.”

People don’t like to think about becoming disabled.  Therefore, they don’t plan for it.  As a result, many people are caught short, especially in retirement when care needs tend to develop.  In fact, the primary cause of bankruptcy in the U.S. is the cost of care in later life.  That’s why it’s important to make a plan. 

As Sullivan says, “For most consumers, the hardest part is getting comfortable paying for insurance that will kick in when they need help doing things they take for granted today: bathing, dressing, eating.  Despite the fact that three out of four people who live to age 65 are likely to need such care, consumers are hesitant to buy LTC insurance to cover the need.”

Consumers who run the calculations quickly realize that if a care need develops, they would quickly recoup all of the premiums—and much more.

Many people think that Medicare covers most long term care.  But that’s not true.  Medicare is a form of health insurance, not long term care insurance.  It tends to cover short-term needs, not long-term needs.  If you’re thinking Medicare will pay for long term care, you’re likely to be disappointed.

My wife Mary and I have helped both sets of our aging parents with various types of care.  That woke us up.  We can see now that we’re next, in a very real way.  And we’re not unusual:  when “children” see their parents needing help, they realize that they’re vulnerable too. 

You have to get the insurance before you need it.  If you wait until you develop health problems, you probably won’t be able to get it.   As Sullivan says, it commonly costs about $1000-$4000 a year in premiums.  Many people balk, but the premiums are far less expensive than the cost of care, which can be hundreds of thousands of dollars. 

Policy costs are based on the age you apply.  Even if rates increase later, which may happen, the cost is likely to be less than waiting to buy later—or not buying at all. I will address in a future post how to amend existing policies to keep them affordable, even if the premiums change.   

Mary and I hope we never need our long term care insurance.  But we have it because we want to protect ourselves financially, and so we can enjoy the rest of our lives.  It’s our safety net.  It gives us peace of mind.

See my post here on how long-term care insurance can save your retirement.

In future posts, we’ll talk about life insurance with LTC riders.  Paul Sullivan talks about this in his good article.  Here’s a link:

https://www.nytimes.com/2016/12/09/your-money/combine-long-term-care-with-life-insurance-do-the-numbers-first.html?_r=0

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