Long Term Care insurance (LTCi) -- Some things to think about

Seven in ten clients will require long-term care at some point in their life.


There is so much compelling information—and common sense—surrounding LTCi that it would seem it should be intuitive for people to understand the risk to their retirement (and even before retirement) assets. And, with an aging population and huge federal deficits engulfing Social Security and Medicare, there is no doubt that people with assets will be expected to pay (or their estates will repay) the government for the care they receive.


First, it is helpful to review some statistics. The John Hancock Life Insurance Company performs an annual survey of long-term care which is very informative.  Overall, at least 70% of people who live to age 65 will require some long-term care services at some point in their lives. That means that only three in 10 people will live out their lives without a need of long-term assistance. Will you need care someday? 


The potential need for long-term care is a risk that all Americans face—and one that can take a heavy toll. The latest statistics show that the average stay in a nursing home is 876 days, or about two and a half years. (Keep in mind that doesn’t account for how many years of care the person may have received at home prior to entering the nursing home.) Multiplying 876 days by the average daily cost for a private room yields a staggering tab: $178,704 in today’s dollars. Of course, some people will have a shorter stay and some will have a longer stay and sound risk management means that people should insure against the catastrophic exposure. But, even a basic benefit policy of $100 a day will go a long way toward paying for home or institutional care.


Another public misconception is that long-term care is primarily a need of elderly. Surprisingly, nearly 41% of long-term care is provided to people under age 65 who need help after an accident or stroke or as a result of chronic illness or debilitating diseases. Talk with an agent now about long-term care coverage—don’t procrastinate until you are in your 60’s to purchase care. Of course, another reason not to wait is that premiums increase dramatically if people wait until their 60’s and it is more difficult to satisfy the underwriting requirements as people age.

There is hardly a person in America who doesn’t know a relative or a relative of a friend who is receiving long-term care assistance. What most people don’t realize is that Medicare doesn’t cover long-term care expenses (except for some skilled nursing benefits following hospitalization). Insurance agents are educators and ignorance is not bliss. Now is the perfect time to have a conversation with your agent about LTCi. You never know what tomorrow will bring.