Should You Consider Long-Term Care Insurance?
by Trevor Royston
Universal Advisor, 2007 Issue No. 3
Will you still need me, will you still feed me, when I’m sixty-four?
— Lennon & McCartney
When The Beatles released “When I’m 64” back in 1967, 64 years was about as long as most Americans were expected to live. In 1900, in fact, the average life expectancy for Americans was 47.3. Today it’s 77.8. Given medical advances, it’s reasonable to expect that this number will continue to increase.
However, not only are people living longer, they’re living longer with conditions that may necessitate assistance, whether via home care or nursing home facilities or something in between. Given this knowledge and the aging baby-boomer population, many people are evaluating their long-term care (LTC) options.
What Is Long-Term Care Insurance?
Many people are confused about where health insurance ends and LTC insurance begins. Put simply, LTC applies to situations that aren’t going to improve — where maintenance is the desired outcome. Depending upon the policy you select, LTC insurance may cover:
- Skilled services (nursing care and physical, occupational, respiratory, and speech therapy)
- Home health care (assistance with personal hygiene and managing medications)
- Homemaker and chore services (meal preparation, laundry, light cleaning, minor household repairs, etc.)
- Hospice care
- Adult day care (a program that provides social activities in a group setting outside of the home)
How Expensive Is It?
Although LTC insurance has been around for a while, it’s still a relatively immature market and field. Since the first generation has yet to complete a full series of claims, today’s pricing is based on assumptions that have not yet been demonstrated, aren’t guaranteed, and may change over time. However, one fact is certain: it’s more expensive the longer you wait to purchase it.
Today, the premium for a policy with a $5,300 unlimited monthly benefit for life with a 90-day elimination period would be as follows for 50-, 60-, and 70-year-old consumers in preferred health:
| Purchase Age |
Annual Premium* |
| 50 |
$ 3,476.80 |
| 60 |
$ 4,918.40 |
| 70 |
$10,048.80 |
*The preferred health discount is not automatic. Certain eligibility requirements must be met to qualify for it. Annual premium amount is representative of products currently available. Premium at time of purchase may be higher or lower than the amount shown.
Should You Consider It?
The answer to that question is highly situational. The important thing is to understand what you’re paying for and make an informed decision versus an emotional one. If you have any questions regarding LTC insurance or would like assistance evaluating your options, please feel free to give us a call.
Plante Moran Insurance Services is a member of FINRA. Securities offered through: Valmark Securities Inc., an unaffiliated securities broker-dealer. Member FINRA, SIPC.
