Long-Term Care Insurance – Protect Your Loved Ones and Retirement
Long-term care insurance (LTC) is a type of insurance that helps cover the cost of long-term care services, such as those provided in a nursing home, assisted living facility, or at home. Long-term care services can be very expensive, and LTC can help protect your retirement savings and assets from being depleted.
Why is Long-Term Care So Expensive?
The average cost of a semi-private room in a nursing home in the United States is over $100,000 per year. Assisted living, memory care, and in-home services are typically even more expensive.
How Can Long-Term Care Impact Retirement Savings?
If you need long-term care and don't have insurance, you could quickly deplete your retirement savings. A study by the Centers for Medicare & Medicaid Services found that the average person who needs long-term care spends over $300,000 on care.
How Do Long-Term Care Insurance Products Work?
To trigger an LTC claim, the insured typically has to be unable to complete 2 of 6 Activities of Daily Living (ADLs). ADLs include bathing, dressing, toileting, transferring, eating or continence. If you need long-term care, your policy will pay a daily or monthly benefit to help cover the cost of care. Most LTC policies have a waiting period before benefits begin, typically 30-90 days.
What Do Long-Term Care Insurance Policies Cover?
LTC policies typically cover a wide range of long-term care services, including:
Skilled nursing care
Assisted living care
Home health care
Adult day care
Hospice care
Some LTC policies also cover other services, such as respite care and transportation to and from care facilities.
Who Should Consider Purchasing Long-Term Care Insurance?
LTC is a good option for people who want to protect their retirement savings and assets from the high cost of long-term care. LTC also helps to protect your family members from having to become your caregivers. Often times family caregivers must leave the workforce to provide care to an aging family member. This work is emotionally and physically stressful, often having negative impacts on the caregivers health and standard of living.
Here are some additional things to consider when deciding whether or not to purchase LTC:
Your age and health. LTC is typically most affordable when you purchase it at a younger age. If you are in good health, you may be able to qualify for a policy with lower premiums.
Your financial resources. LTC can be expensive, so it is important to make sure that you can afford the premiums. You should also consider how much you can afford to pay out of pocket for long-term care if you don't have insurance.
Your family history. If you have a family history of Alzheimer's disease or other chronic conditions that may require long-term care, you may be at an increased risk of needing long-term care yourself.
Your Medicaid eligibility. If you have a low income and few assets, you may be eligible for Medicaid, a government program that pays for long-term care. If you are eligible for Medicaid, you may not need to purchase LTC.
Conclusion
LTC is a complex topic, and there is a lot to consider before purchasing a policy. If you are thinking about purchasing LTC, it is important to talk to a qualified financial advisor to get help choosing the right policy for your needs.
DISCLOSURES:
The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.
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Consilio Wealth Advisors, LLC (“CWA”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where CWA and its representatives are properly licensed or exempt from licensure.
