Long-Term Care Insurance (Part #2)

Long-Term Care Insurance (Part #2)

Welcome to the second post on Long-Term Care (LTC), one of the top questions I received from the WorkFlowRetirement Community.  Thanks for coming back - I hope you found the first post informative.  Before I jump into Part #2, let’s recap Part #1.

LTC provides extended care for someone who has a significant illness or disability and needs help with day-to-day activities.  Also, most of us will need some type of long-term care in our lifetime.  Below are some stats:

  • Someone turning age 65 today has almost a 70% chance of needing some type of long-term care services and support in their remaining years.

  • Women need care longer (3.7 years) than men (2.2 years) - because they live longer.

  • One-third of today’s 65 year-olds may never need long-term care support, but 20 percent will need it for longer than 5 years.

  • In general, more people will require some type of LTC at home versus at a facility.

  • Medicare only pays for long-term care if you require skilled services or rehabilitative care with a number of limitations.

  • There are many questions (I listed 10) to consider when determining if a Long-Term Care policy is right for you.

The entire post can be found here.

In this post, I’ll outline the pros and cons of Long-Term Care insurance, my plan for long-term care, and some useful references I found along the way.

The Pros and Cons

Like most things in life, there are good-things and not-so-good-things about Long-Term Care insurance.  That’s why this is a difficult decision and varies by individual.  Below are the some of the top pros and cons to consider:

Pros

  • Provides funding for long-term care expenses not covered by other insurance

  • Protects your retirement savings from a significant unplanned expense

  • Provides ‘peace-of-mind’ that you (or your spouse) will receive reasonable long-term care

  • There is a high likelihood that you (or your spouse) will require long-term care

Cons

  • Policies are quite expensive (unless purchased at an early age)

  • Premiums can increase every year making the policies out-of-reach for some later in life (living on a fixed income)

  • Insurance providers are still determining how to price and maintain these policies.  Which can lead to large premium hikes and firm instability.

  • The number of providers who have exited this business is significant. In 2000, 125 insurers offered stand-alone policies.  In 2014, the number of providers was less than 15.

As you can see, there are some definite benefits to having this type of insurance but also some risks related to premium increases and the stability of the insurance provider.  

If you are considering coverage, I recommend consulting with a trusted insurance broker and financial professional to help you analyze the cost/benefit of these policies based on your financial resources and health history.  I wish you luck; this is a difficult and critical decision.

My Plan for Long-Term Care

So, what will I do?  After my research and analysis, I decided not to purchase Long-Term Care insurance.  In other words, I will self-insure any long-term care costs from our retirement savings.  My wife may not be happy with this because I’m counting on her to take care of me.  This is our little secret, don’t tell her.  Seriously, I budgeted for this as part of our retirement savings.

I have to admit, this was not an easy decision for me.  What led me to this decision is a few things - all specific to our personal situation.  

  1. The cons that I have documented above.  

  2. My wife and I lead a healthy lifestyle.  We exercise daily, and my wife is a certified nutritionist who helps me maintain a healthy diet and weight.  

  3. We invested in an excellent health insurance plan, so we have physicals each year, see the appropriate specialists (when needed), and diligently monitor our blood work.  

  4. No one in my immediate family (so far) has encountered a significant long-term illness.  I’m hoping that trend continues for me.

Some Useful References


Have you determined a strategy for Long-Term Care?  If so, do you have a policy in place?  How is it working for you?  Are you planning on self-insuring or still determining what to do?  Please share your experiences with our community.

I would love to hear from you, help you, and answer your questions.  Post your comments below and please join our community here.

Good luck and let's #RetireHappy.

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Long-Term Care Insurance (Part #1)

Long-Term Care Insurance (Part #1)