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Do You Need Long-Term Care Insurance?


Christian talk radio with Rob West

August 8, 2022

The government says that more than 2 out of 3 Americans will need long-term care at some point. Long-term car insurance isn’t cheap. Can you afford to buy it? Or rather, can you afford not to? We’ll talk about that today. According to the Department of Health and Human Services, if you’re 65 today, you have only a 1 in 3 chance of not needing long-term care, and 1 in 5 seniors will need long-term care for more than five years. The average length of care for women who need it is 3. 7 years. For men, It’s a bit less, 2. 2 years. With nursing home care now averaging nearly $100, 000 a year, it’s clear to see that it would have a devastating effect on retirement savings. That’s why we urge most people to consider getting long-term care insurance, sometime between the ages of 50 and 60, and to get the longest-term policy you can. That will help keep down the cost. There’s a rule of thumb that says you only need this insurance if your assets (excluding your home) are between $200, 000 and $2 million. More than that, and you can afford to pay for it yourself. Less than that, and Medicaid will quickly step in to pay for nursing home care. When you consider buying long-term care insurance, three factors play a role: having family in the area, your health, and whether you have a plan option through your workplace. One of the main reasons people purchase LTC insurance is to avoid becoming a financial burden on their loved ones, and that’s a real concern. According to the National Alliance for Caregiving, some 53 million Americans are providing unpaid care for relatives and friends. That, of course, limits the caregivers’ ability to work elsewhere and earn income. Now, I mentioned that LTC insurance isn’t cheap. Annual premiums for a 55-year-old man average around $2200, and significantly more for a 55-year-old woman, $3700, owing to their typically longer need for care. One way to keep the cost down is to avoid buying more LTC insurance than you’re likely to need. We have better data these days to help. Remember that men average 2. 2 years of care, women, 3. 7. You can decide how much coverage to purchase based on those averages. Your provider may suggest other ways to keep the cost down, as well. One way might be to add an LTC rider to a whole life insurance policy. Normally we advise folks to get term life insurance, but an LTC rider is a good argument for whole life. Combining long-term care coverage with life insurance is one way to keep the cost down, but the downside is that it may not provide as much in benefits as a separate LTC policy. But no matter what type of LTC policy you’re considering there are basic questions you need to ask your potential provider: Does the policy protect against inflation? That’s especially important these days again, with inflation running above 9%. Does the policy guarantee level premiums and for how long? Also, does it guarantee that you’re paying the same as other policyholders your age? Is home health care covered? And does that include skilled care? Take the time to find out exactly what the policy will cover to avoid unpleasant surprises in the years ahead. Can you renew the policy? You want one that guarantees this regardless of your health or age, providing you’ve paid the premiums faithfully. And finally, can you afford the deductible, and how long is the waiting period before the policy kicks in? Most require you to pay out of pocket for a specified number of days before coverage starts. Make sure you can afford it. On today’s program, Rob also answers listener questions: ● Is it normal for most of your car payment to go toward interest rather than paying down the principle? ● How do you determine when it makes sense to refinance a mortgage? ● How does a 401k differ from an IRA? ● What is the best way to establish a budget? ● Show you delay paying off a home due to tax considerations? RESOURCES MENTIONED: ● Christian Credit Counselors

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