When is the Best Time fo Buy Long-Term Care Insurance?
When is the best time to buy long-term care insurance? lt's a question people ask every day. The answer is: before you need it! While long-term care insurance may not be appropriate for everyone, the increasing costs of healthcare combined with the fact that people are living longer these days, means that most of us will need to stretch our retirement savings over decades. So, the best thing to do is to have a plan.
A long-term care event could seriously affect your life not just emotionally, but also financially. In general,private home care can run as high as $36 an hour ($288 a day for an eight hour day) – $105,120 annually (Genworth Financial 2010 Cost of Care Survey). Medicare typically only covers certain long-term care not to mention the fact that it has certain limitations and options. Long-term care insurance typically covers the cost of the following:
- Help in your home with daily activities like bathing, dressing, transferring, and eating.
- Community programs, such as adult day care.
- Assisted living services that are provided in a special residential setting other than your own home. These services may include meals, health monitoring, and help with daily activities.
- Visiting nurses.
- Care in a nursing home
No matter what your age, a typical financial goal is to grow hard earned assets and to take care of loved ones, now and in the future. So let's take a closer look at when long-term care insurance may make sense for you.
Your 20s and 30s
In these age groups you are energetic, enjoying peak health and feeling you are invincible.lt is a possibility that you have not even thought of life past age 40.
The big 4-0. At this stage, retirement is becoming a reality. You start checking your position in your retirement fund and start seeking a good financial advisor to maximize your investments. At this point too, you are more established in your career and your children are older – maybe reaching high school or college age. Combined with caring for children, at this age, you may also have parents that need long-term care. Now the reality hits home about how long-term care affects families. At some point in the future, you may need long term care. lt would be smart to have a plan for such an event.
The golden years. The kids are grown; you are entering retirement; maybe you've even paid off your house and joined the ranks of AARP! Whether through personal family experience or from the experience of friends, you've seen how the need for long-term care can tap a family's resources and the emotional burden it may bring. As difficult as it can be, it's time to think about long-term care insurance yourself and have the conversation with your spouse or loved ones. You will want to consider any health problems you have, how long your relatives tend to live, and any assets you plan to leave to heirs. Just as important is the fact that it is also time to consult a professional about the many options for long term care and how to fund it. At this age, policies can be affordable and can bring peace of mind once these risks are covered.
This decade is when people usually look into purchasing a long-term care insurance policy. lf you wait until you are in your 70s,you may face insurability and affordability issues. The older you get, the greater the risk that you will have health problems and become uninsurable or a long-term care insurance policy will be more expensive.
While it may be very expensive to buy LTC insurance at this stage, consider the cost of needing long-term care versus paying a premium for a policy. you will find that premiums for long-term care insurance are still less than paying for long-term care. Consider this: for a 70-year old man or woman,the average long-term care insurance policy may cost anywhere from S10,000 to S15,0OO a year.
This is a $200 a day, lifetime benefit standard rate policy. Compare that annual premium with the average cost of long-term care expenses. In California the average cost for long-term care can be anywhere from $75,000 to $100,000 a year! So while the annual long-term care insurance premiums certainly aren't inexpensive, LTC insurance can give you the coverage you need at a significantly smaller cost than self-insuring – allowing you to safeguard a lifetime of hard-earned money.
There is No Right Age For LTC lnsurance So when should you buy long-term care insurance? The answer is: before you need it! Factors such as, net worth; how much of your assets you are willing to spend on health care, how much you want to leave your heirs; marital status; and age all play a role in deciding the right time. For example, if you are in your 40s with a family history of Alzheimer,s and longevity, you may want to consider purchasing a policy now. lf you have a high net worth and want to control where you receive care and you want to leave a large inheritance you may be able to assume the higher premiums in your mid-60s.
One thing is certain and that is the uncertainty of life. With solid planning, including long-term care insurance, you can be better prepared to assume the risks of living a long and full life.
This article is compliments of Ken Hacker, a long-term care specialist practising in Walnut Creek CA.