Is it wise to self-insure your long term care risk? 

     I was speaking with a man in Atlanta, GA yesterday who I had sent our standard long term care insurance binder (which features side-by-side quotes from the top five companies).  He had reviewed the proposal and said he was not going to purchase long term care insurance (LTCI) but rater self-insure because he said he had substantial assets.  “Substantial assets?” I asked. He proudly said “My wife and I are worth about 1.5 million.”  His definition of substantial assets is misguided, and if he thinks he could pay the cost of care if he or his wife (or both) needed long term care for 5+ years, without drastically changing he and/or his spouse's life style, he is sadly mistaken. 
     I honestly think that most people who do say they want to self-insure their long term care risk are the people who are the most afraid of needing long term care (LTC). As opposed to attacking the problem head-on on, many people bury their head in the sand and ignore the last greatest risk they face in their retirement.  If you have $4-5 million, I can maybe see the point of self-insuring to a certain extent, but I bet Warren Buffet still has home owner's insurance on his “modest” house worth $750K in Nebraska.  Do you think he could pay for a replacement house if his burned down?  The point is, the most savvy investors can see the writing on the wall and know that long term care insurance is simply portfolio protection, as well as an assurance that they will get the quality that comes from privately paid care. The alternative is not having LTCI, running out of money and ending up on Medicaid (Welfare). 
     Imagine your financial situation is a house, and you're building your dream home from the ground up.  What's the first step?  Put the roof on?  Of course not.  Clear the land and pour a rock-hard solid foundation.  Insurance is your foundation and making up this foundation are four ingredients: 
1. Home-owner's Insurance
2. Medical Insurance
3. Auto Insurance
4. Long term care insurance
     The only thing is, your long term care risk in your last 20-30 years on this planet are indeed the GREATEST risk you will face.  If you can be a logical, rational thinker and are brave enough to face the uncomfortable facts of becoming dependent in your older age on another person to help take care of you, long term care insurance will make complete sense.  If not, continue to gamble and you will essentially be betting your entire life's savings on black as you watch the roulette ball spin round and round until it lands on either black and you win, or red and you lose.  Wealthy people are NOT gamblers, and certainly did not become wealthy by gambling.  What about you?
At LTCtree we work with most all the blue-chip companies so fill out the simple form below and we'll mail you your side-by-side long term care insurance comparison today.

Darrick Wilkins
5/2/2008