Buying Long Term Care Insurance: Who Should? And When? And Why?

Is Long Term Care Insurance Right for You?

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Condsiderations When Buying Long Term Care

Who Should Purchase Long Term Care Health Insurance?

The short answer is easy:

Anybody who does not have (or does not want to spend) hundreds of thousands of dollars to cover long term care should have long term care insurance. In the event that you are unable to care for yourself, a long term care health insurance policy will prove valuable.

The national average for the annual cost of semi private nursing home care is $52,000., This number can be much higher depending on your location. Even at $52,000 per year, you can quickly deplete all your retirement assets and ruin your retirement plan. Buying long term care insurance is an important tool for asset protection planning in retirement.

However, the long term care insurance price tag is expensive. Moreover, buying long term care insurance can be a complicated process, with many plans requiring long term care exams. Finally, long term care insurance comparison is not always easy.

When evaluating if long term care insurance should be part of your retirement plan, consider the following guidelines:

  • If you have significant retirement assets, then long term care health insurance may be a good choice for you.
  • If you qualify for low-income medical assistance like Medicaid, then you should not incur the expense of long term care health insurance. Medicaid does cover a minimal level of long term care.
  • If you are somewhere in the middle – you will have to consider your financial and life goals and think carefully about the decision to purchase long term care health insurance.
  • If you have a family history that would indicate a higher likelihood of needing long term care, you should give it greater consideration.

When Should You Purchase Long Term Care Health Insurance?

When to purchase long term care insurance is also a tricky decision.

  • If you buy it when you are young, it is a large cumulative expense for something that you might never need.
  • If you buy it when you are older, it is an expensive short-term proposal.

In general, many experts agree that around the age of 65 is a good time to purchase long term care insurance – but this is a mere guideline – your health history or financial situation may warrant purchasing long term care health insurance when you are younger, older or not at all.

One further consideration is that long term care exams (medical exam) are required by most long term care insurance providers. So, you need to purchase while you are still healthy.

Why Should You Purchase Long Term Care Health Insurance?


High Probability of Need

When creating your retirement plan, it is very important to understand you're the high chance that you will require long term care.

  • One out of every four – 25 percent – of seniors aged 65 and above will require long term care
  • One out of every two – half – of all seniors aged 85 and over will require long term care

Other statistics show that 42 percent of seniors who are 65 today will enter a nursing home during their lifetime.

Long Term Care is Very Expensive

The high costs of long term health care can spell financial ruin — destroying your retirement plan.

Not Medicare, Medigap nor private medical insurance covers long term care costs beyond a certain modest point. Most people will face major healthcare costs in retirement, yet few people include these costs in their retirement planning. The money spent on long term care could significantly reduce or even wipe out your savings.

In 2010, the average rate for a private room in a nursing home was $229 a day, or about $83,000 a year, according to a survey. If the room rates reflect current annual increases in nursing home costs, then by 2021, when today's 65 year olds might need such care, the average rate will have risen to about $480 a day, or $175,200 annually. Most retirees do not even have this much money saved for the entirety of their retirement.

Home health care, the least expensive alternative to long term care, costs on average more than $20,000 per year (that's $18/hour, five hours per day, five days a week for a home health care worker). This number is expected to climb to $68,000 a year by 2030.

Few people have amassed such large sums to cover their long term health care needs. And, the government is unlikely to pick up the tab – unless you are able to qualify for Medicaid benefits in a state that covers long term care. Even so your quality of care may be lower than the standards for long term care that you would want for yourself