Long-Term Care Insurance

The Ins and Outs of Buying Long-Term Care Insurance

Think about this coverage not just as insurance for long-term care, but for your retirement nest egg itself. With that in mind, here are some tips.

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:

  • 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.

About the Author

Ken Moraif, CFP®

CEO and Senior Adviser, Retirement Planners of America

Ken Moraif, CFP, is CEO and senior adviser at Retirement Planners of America, a Dallas-based wealth management and investment firm with over $4.3 billion in AUM and serving over 8,000 households (as of May 2019). He is also the host of the radio show "Money Matters with Ken Moraif," which has offered listeners retirement, investing and personal finance advice since 1996.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
The 25 Cheapest U.S. Cities to Live In
places to live

The 25 Cheapest U.S. Cities to Live In

Take a look at our list of American cities with the lowest costs of living. Is one of the cheapest cities in the U.S. right for you?
October 13, 2021
Gen X: How to Make Sure Your Future Self Remains Funded
personal finance

Gen X: How to Make Sure Your Future Self Remains Funded

If you’re a Gen Xer, like me, now might be the right time to talk to a financial professional to learn more about how to adjust your retirement planni…
October 20, 2021

Recommended

Smart Year-End Move: Manage Your Employee Benefits
Financial Planning

Smart Year-End Move: Manage Your Employee Benefits

For 2021, employers may provide a 12-month grace period for both types of flexible spending accounts.
October 27, 2021
The Best Fidelity Funds for 401(k) Retirement Savers
Investing for Income

The Best Fidelity Funds for 401(k) Retirement Savers

Fidelity funds are renowned for their managers' stock-picking prowess. We rate Fidelity's best actively managed funds that are popular in 401(k) plans…
October 25, 2021
From EBRI's CEO: What's on Retirees' Minds
Empty Nesters

From EBRI's CEO: What's on Retirees' Minds

Retirees feel more comfortable spending from steady sources of income rather than tapping their nest egg.
October 25, 2021
Billed for a COVID-19 Vaccine? Don't Pay
Healthy Living on a Budget

Billed for a COVID-19 Vaccine? Don't Pay

If you are charged, it's an error. Call your provider directly and dispute the fees.
October 25, 2021