Even if you have a substantial multi-million dollar nest-egg it is a smart idea to buy some amount of long term care insurance (LTCI).  Everyone who has enough money to afford the LTCI premiums should at consider buying long-term-care insurance, no matter how much money you have saved.  The huge potential cost for needing long term care in a nursing home or home health care is immense and can destroy most nest eggs in just a few short years.   This insurance has become even more valuable as most people have seen their retirement accounts cut in half and the option of self insuring the risk is no longer on the table.

Kiplinger’s Personal Finance recently wrote:

The average cost for a private nursing-home room is $74,208 a year ($203 a day), according to the cost-of-care survey released on April 30 by insurer Genworth. And that’s in today’s dollars. If the cost of care continues to rise at its current rate (more than 4% per year), then one year in a nursing home could be more than $270,000 if you need care in 30 years.  Nearly three-fourths of Genworth’s initial claims are for long-term-care services received in the home, and those expenses can be even higher. The survey found the average rate for state-licensed home health aides was $18.50 per hour, which adds up to more than $400 per day for people who need 24-hour care.

A good way to pick the amount of long term care insurance to buy is to take a look at the actual cost of care in your area.  Once you know the cost of the potential risk, ask yourself how much could your income cover per month if any and buy a policy for the difference.  Reducing a $250 LTC plan to $125 will cut the cost in half so be sure to consider how much you’ll be able to chip in from say Social Security and pension.

Picking the length of time is a bit harder to do but I remind my clients 3 things:

1. Long Term Care Insurance is not a cheap so pay attention  and don’t buy too much.
2. You may never even use the policy like your auto insurance policy.
3. 92% of claims are for 3 years or less.

You really have to find the balance between insurance and investing because like any insurance you have buy too much coverage.  If you’d like to learn more tips in selecting a company and plan simply fill in this form. Thanks for reading today…we really appreciate it.