Nobody wants to believe that they will ever need long-term care, but there are some statistics that you need to know so you can make an informed decision. Yes, of course, you are not a statistic, but these numbers are staggering and may shed some light on the issue at hand. These statistics are objective and meant to give you information rather than to persuade you.
Factors against purchasing long-term care insurance
The consumer price index (CPI) is a modest measurement of inflation. In 2012, the CPI was at 3.1% and the cost for long-term care insurance premiums increased between 6% and 17% in the same year according to the American Association for Long-Term Care Insurance. Translation: Long-Term Care is eating away your money at a faster rate than inflation. This is important to know as you decide if you can afford to pay for long-term care insurance premiums.
According to Morningstar, A person aged 55 or younger paid an annual premium of $1,831 ($152.58/mo.) for long-term care insurance policy (provides a daily benefit of $150, four to five years of coverage in home and institutional settings with a 90-day waiting period). However, those people between 70 and 74 paid $3,421 ($285.08/mo.) for the same long-term care coverage.
Individuals who have modest means may have challenges paying simple living expenses, and therefore, the thought of paying for long-term care is not a feasible option especially if they passed the ideal age to purchase long-term care at a more reasonable rate.
Factors for purchasing long-term care insurance
As you can see from the statistics above, there are financial risks involved with purchasing long-term care. However, peace-of-mind is a benefit in which some individuals place a high premium. The cost for out-of-pocket for nursing home care vastly vary depending on where you live in the US. For instance, individuals who live in Des Moines paid $60,773 in 2012 for nursing home care, while people in Manhattan paid $162,425.
Perhaps you are thinking that you have a low chance of needing long-term care. 40 percent of all people 65 or older will enter a nursing home during their lifetime. In 2012 there were 9 million people over the age of 65 who needed long-term care. That number is expected to rise sharply as the number of people turning 65 is happening faster than any other time in history.
Making a sound decision about whether to opt for long-term care insurance involves weighing the probabilities. Is it worth it to pay the premiums for many years while premiums continue to rise in exchange for the peace of mind that your nest egg won’t be wiped out to pay for your care at the end of your life? On the other hand, what if you never need long-term care, or only need it for a limited time?
Unfortunately, you will never know until after-the-fact. Whether or not you decide not to purchase long-term care, make an informed decision. The decision to buy long-term care insurance is a very important decision that you should not leave to chance. The future of your family’s financial well-being is potentially at stake.
If you reside in the Greater Los Angeles and Southern CA area, please don’t hesitate to contact me with your long term care insurance questions. I can help you to best determine if long term care is a good fit for you. My contact details are below…
