Ins and Outs of Buying Long-Term Care Insurance

I often suggest long-term care insurance to my clients, and I almost always hear this objection: “It’s too expensive.”

Can You Afford $72,000 a Year for Long-Term Care?

Yes, long-term care insurance is not cheap, but medical insurance and Medicare typically do not cover that particular type of care, and it is incredibly expensive. The 2017 Genworth Cost of Care Survey lists the national median cost for a private room in a nursing home as $267 a day, which is $8,121 per month, and $97,455 per year. As you can see, if you need that care, your money could disappear very quickly.

And, unfortunately, you probably will need long-term care. On its website, the U.S. Department of Health and Human Services says:

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just ~~$107.88~~ $24.99, plus get up to 4 Special Issues

CLICK FOR FREE ISSUE

https://cdn.mos.cms.futurecdn.net/flexiimages/y99mlvgqmn1763972420.png

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Someone turning age 65 today has almost a 70% chance of needing some type of long-term care services and supports in their remaining years.
Women need care longer (3.7 years) than men (2.2 years).
One-third of today’s 65-year-olds may never need long-term care support, but 20%will need it for longer than five years.

Now that you are convinced (and I hope you are), there are a few things to consider when buying long-term care insurance:

Purchase it with your partner. Insurance companies offer discounts to couples who are married or living together. You could save up to 30%.

Consider shared care. You can purchase a feature that allows couples to share the benefits of each other's policies. For example: If Mr. and Mrs. Smith each buy $200,000 in benefits and Mr. Smith needs long-term care, he can use all of his $200,000 and then tap into Mrs. Smith's policy, which, if untouched, could provide another $200,000 in benefits.

‘Senior Inflation’: The Not-So-Silent Retirement Killer

Don’t forget inflation coverage. Long-term care insurance has its own inflation rate, and it typically rises faster than the national inflation rate.

Shop around. If you're like most people, you don't even know what coverage looks like. Check to see what your monthly benefits would be, and how they compare to the costs of long-term care in your area.

Buy before your birthday. Long-term care insurance rates are based on your age. You'll save money if you buy before your next birthday.

Learn about any possible tax write-offs. If you are a business owner, or have high health care costs, your long-term care insurance premiums may be tax deductible.

Talk with a professional. Long-term care insurance is complex. There are hundreds if not thousands of different kinds of long-term care policies offered by hundreds of different insurance companies. I suggest you consult with an expert to find the right policy for you.

I strongly advise that you investigate the merits of a policy. Consider it portfolio insurance; after all, you’re protecting your finances from potentially devastating damage.

Claim Social Security Early or Wait? Advice from the Pros

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

TOPICS

Ken Moraif is the CEO and founder of Retirement Planners of America (RPOA), a Dallas-based wealth management and investment firm with over $3.58 billion in assets under management and serving 6,635 households in 48 states (as of Dec. 31, 2023).