Long-Term Care Insurance: A Complex Equation

When it comes to Long-Term Care Insurance, many questions arise.

The answers are not black-and-white. Your age, your wealth, your wealth curve (and where you are on it), your desire to leave money to beneficiaries (charities, family, friends), your level of tolerance for peace of mind and your personal experience all come into play.

It’s a complex equation. But the answer is that now is the time to focus on this, if not for yourself, then for your parents, grandparents or siblings for whom caregiving needs may be more imminent.

Here are some straightforward (and sobering) facts

FACT Today, 6.3 million Americans age 65 or older need help with two or more daily activities. That’s most, but not all the people who need long-term care. Another 3.7 million are 64 and younger.

Long-Term Care is not something to put off. You may have parents, grandparents or siblings in need of long-term care.

FACT The annual aggregate cost of long-term care in the US in 2017 was $225 billion. The annual MEDIAN costs of care across the US are:

The amount it will cost you, if you are uninsured, depends on the best match for the type of care you might need and where you live. The bottom line is, long-term care is expensive.

FACT Relying on family or close friends to be responsible for caregiving is both an emotional and financial burden. The dollar value of unpaid caregiving in 2013 in the U.S. was $470 billion. While they are taking care of you, caregivers are losing time at their own jobs and with their own families.

Relying on a family member or friend for care has inherent costs, even if you aren’t paying them.

FACT Standalone long-term care policies are expensive and often ineffective. While these were popular two decades ago, today there are just 17 insurers offering standalone policies.

Hybrid policies are a better option. Getting out in front of your future needs is unquestionably preferable to running to catch up. By combining life insurance with long-term care features, today’s hybrid policies provide an attractive investment vehicle and peace of mind.

Protect your retirement assets from being diverted to pay for long-term care costs and free your family from the burden of financial responsibility for your care. It’s the rational way to put idle savings or low-interest CDs to work.

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