Long-term Care Insurance

Long-term care insurance is expensiveInsurers keep raising ratesAlmost a third of owners have to stop paying!Most of us will never need itThere are better alternativesDo Not Buy a LTCi policy before you compare alternativesLTCi policies average about $2,500 a year but they don't cover the full cost of care-averaging $87,235. Most sellers recommend starting before age 65 while we are still healthy and insurable but we will pay more. Like all disability insurance, we are paying for something that we may not need at all. Unlike the cost of a major medical operation covered by our comprehensive health care plan, the cost of long-term care can be estimated fairly accurately. With a 13% and 4% chance of spending 2+ years in a nursing home for women and men respectively, the average cost will be about $200,000. If we can stay at home, a home health aide costs about $20,000 a year. The average policy costing $2,500 a year will NOT cover all expenses. Depending on the institution we check into, daily costs are $250 a day or more. There are other medical costs-either out of pocket or a Medigap policy-that Medicare does not cover. There are other medical expenses on top of that. Because we are buying coverage for some period in the future-perhaps 30 years away-we must plan for inflation. Our $250 a day coverage may be worth only $120 while the price of care goes up annually. Some folks buy inflation protection with their policy but this just raises the price to perhaps $3,000 a year.