As medical advancements extend our definition of "a ripe old age," the frailties and medical concerns of aging make it increasingly important to ask, is long-term care insurance necessary? With the soaring costs of healthcare, the necessity for this coverage may seem a moot point. On the contrary, the need for LTC insurance does not apply to everyone.
Is long-term care insurance necessary for you? The answer to this question depends on your own personal risk factors as well as your current and projected financial situation. Here's how to find out if you need long-term care insurance.
Five Reasons to Should Consider LTC Insurance
1. The Longer You Live, the Higher the Odds that You Will Need LTC Services.
The National Clearinghouse for Long-Term Care Information estimates that on average, 60 percent of all the people who live to the age of 65 will need long-term care. This care encompasses a whole range of medical and non-medical services, which are provided to people who are unable to perform particular activities of every day living. The need for long-term care is a natural progression of aging.
2. Most Health and Disability Insurance Plans do not Cover Long-term Care
LTC insurance picks up where disability and health insurance coverage leave off. Very few health care plans include coverage for extended care outside a hospital setting. Medicare benefits, on the other hand, only cover skilled care, while Medicaid has stringent requirements regarding who may qualify for LTC coverage. To qualify for Medicaid, for example, you and your spouse must "spend down" almost all your assets.
3. It is Designed to Protect Your Savings and Investments
The cost of long-term care can be financially draining. The annual cost of a nursing home runs in the tens of thousands - and counting. According to Genworth Financial's annual benchmark study, the 2007 average annual cost of a room at a nursing home was estimated at $74,806. This cost is expected to more than triple by the year 2030.
4. It Broadens the Number of Care Options Available to You
With Medicare, you do not have much say in the quality of care you receive, let alone the facility at which you will receive it. What's more, some long-term care facilities do not accept Medicare, which further limits your options. Having LTC insurance gives you greater control over decisions regarding the type of care you will receive, as well as where you will receive it.
5. Long-term Care Insurance Helps Ensure Your Independence and Dignity
There is a measure of security in the knowledge that you can afford the necessary care if the need arises. It also affords you a measure of independence. You will not be a financial or personal burden on your family, which relieves your family from having to provide this care or pay for it.
Five Factors that Impact the Need for LTC Coverage
1. Your Family's Medical History
If longevity or chronic medical conditions run in your family, you are at a higher risk of needing long-term care. These conditions include Alzheimer's disease, Multiple Sclerosis, stroke or Parkinson's disease,
2. Your Marital and Parental Status
Having a spouse and/or adult children, they may be able to provide informal care in your home. However, if your family members cannot provide these services, a nursing home or other assisted living facility is usually the only other option.
3. Your Gender
Women not only have a longer life expectancy than men do, but they also tend to marry older men. This places them at a relatively higher risk of having to pay for long-term care.
4. Your Age
Longevity brings with it an increased risk of needing long-term care. The longer you live, the more likely it is that the effects of aging may rob you of the ability to perform basic activities of daily living.
5. Your Net Worth
The wealthier you are, the more likely it is that you can pay for your own long-term care; the poorer you are, the easier it is for you to qualify for Medicaid. At both extremes, LTC insurance is less of a necessity.
In the middle are those who cannot pay for long-term care without dire financial consequences, but can afford to pay the premiums for LTC insurance. If this is you, LTC insurance is an ideal tool for meeting your LTC needs while securing your financial future.
Is LTC Insurance Necessary For You?
While it is the most efficient, cost-effective way to pay for your long-term care, the need for long-term care insurance is highly subjective, and depends on your own individual situation. This decision, however, is one of the most important financial decisions you will ever make as you plan for your twilight years.