I often suggest long-term care insurance to my clients, and I almost always hear this objection: “It’s too expensive.”
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
Be a smarter, better informed investor.
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.
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.
-
What to Do About These Three Medicare Changes During Open EnrollmentWith costs due to rise sharply next year, look for coverage that protects your wallet as well as your health.
-
Use the 'Newton Rule' to Grow Your 401(k) Retirement SavingsHarnessing Sir Isaac Newton's rule of retirement can boost your 401(k) savings while you chill.
-
Are You a Small Business Owner Buckling Under Economic Pressure? Here's How You Can CopeSignificant emotional and financial challenges, including tariff worries, are piling up on small business leaders. Here's how leaders can develop more healthy coping strategies and systems of support.
-
To Raise Prices or Not to Raise Prices: Tariff Tips for Small BusinessesSmall businesses are making critical decisions. Should they pass on higher costs due to tariffs, or would that only cost them more in lost customers?
-
Five Retirement Planning Traps You Can't Afford to Fall Into, From a Wealth AdviserTo help ensure you reach your savings goals and enjoy financial security in your golden years, be aware of these common pitfalls. The key is to be proactive, informed and flexible.
-
Your 401(k) Can Now Include Alternative Assets, But Should It? A Financial Adviser Weighs InMany employer-sponsored plans offer limited investment options, which can stunt growth. But participants considering alternatives might need some sound advice to get the most from their accounts.
-
Will Taxes Shred Your 401(k) or IRA During Your Retirement? It's Very LikelyConventional wisdom dictates that you save in a 401(k) now and pay taxes later, but turning that rule on its head could leave you far better off. A financial planner explains why.
-
More Retirees Are Renting: Should You? A Financial Adviser Weighs InIn some ways, renting is cheaper, more flexible and easier, but unless you understand the implications for your taxes and health costs, it might not be for you.
-
I'm a Real Estate Investing Pro: This 1031 Exchange Strategy Can Triple Your Cash FlowSavvy investors can use 1031 exchanges to unlock value by moving capital across markets in a play called geographic arbitrage. These tax implications can make or break the strategy.
-
I'm an Insurance Pro: Everyone Needs to Prepare for Earthquakes, Even if You Don't Live Near a Fault LineHere are my tips for what to do before, during and after an earthquake. The more prepared you are, the more you'll be able to keep your wits about you if it happens.
