Article 33-Estate Planning Series: You Don’t Need Long Term Care Insurance to Be Prepared

Written by Wright Law on . Posted in Estate Planning, Long Term Care

So what is the answer to long term care needs?   Seventy percent (70%) of seniors will need some form of long term care.  Yet Medicare, Obamacare and your health insurance policy will not help pay for those costs, which can reach or even exceed ten thousand dollars a month.

Unfortunately, many assume their only option is to purchase long term care (LTC) insurance.  LTC insurance is a type of policy that will pay benefits when the insured is unable to perform certain activities of daily living (ADLs) such as eating, bathing, dressing, toileting, and transferring. 

However, LTC insurance does not have a good reputation as an effective solution.  From the buyer’s perspective, LTC insurance has at least three serious deficiencies.  First, as with the typical health insurance policy, if the policy isn’t used, the premium payments are “lost.” 

Second, to obtain cheaper premiums, the policy must be purchased before age and infirmities become an issue.  Many people do not even consider LTC insurance until they are age 60 or older.  By that time, the premiums may be so high that LTC insurance isn’t a realistic option. 

Third, LTC policies often permit the insurance company to raise the premiums years after the policy was purchased.  The hike in premiums can be significant.  Just when you may need long term care assistance, you can no longer afford the premiums.

Despite these issues, there may be situations in which LTC insurance is appropriate.  My point, however, is that there are other options to consider . . .  options which may not have even existed just a few years ago.

As it relates to long term care, there are two significant mistakes to avoid.  The first mistake is failing to consider how long term care needs may affect you and your family.  The second mistake is to assume that long term care insurance is your only option to address the issue.  There are many potential solutions . . . unless you wait until a crisis strikes.

© 2015 Steven J Wright  

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