Estimates of who will need long term care place the risk at about 50% for the general population in the United States. Of all men, women, and children of all ages, around half will need assistance with certain activities as they age.
What are the Chances?
Once you reach age 65, the chance of needing long term care hits 70%. So for every 10 American seniors, 7 will need long term care. Only around 8% of US seniors have long term care coverage, though, which begs the question, who is Long Term Care Insurance right for?
Long Term Care Insurance is designed to protect financial assets from the high cost of long term care, which is only growing every year. Genworth Financial, one of the largest Long Term Care Insurance providers in the nation, compiles a Cost of Care Survey every year. This year’s survey found that the median cost of nursing home care for one year now runs more than $87,000.
Paying for Care
Most people can’t afford to absorb that kind of cost without either depleting their asset portfolio or making huge changes to their lifestyle, neither of which is ideal. Rather than do either of those or turn to a family member for care, another situation that is less than optimal, individuals with Long Term Care Insurance can draw down from a separate pool of wealth created by their policy to help pay for care. So, deciding whether Long Term Care Insurance is right for you really isn’t all that difficult.
If you have a retirement nest egg to protect, have the desire to leave a legacy to your children, or simply want to avoid burdening your children or spouse with the responsibility of your care, Long Term Care Insurance can provide the tools you need to help you do just that. If you have little assets and know that you will be able to qualify for Medicaid, Long Term Care Insurance likely isn’t a good choice for you. Those individuals who already know that their financial status will make them eligible for Medicaid long term care benefits shouldn’t purchase a policy because it doesn’t make financial sense.
Knowing Your Risk
People buy Long Term Care Insurance because they understand the risk at hand and recognize the reality that it’s impossible to predict our future health. Even if you have $500,000 saved in assets, self-insuring isn’t wise. Just a few years of care can quickly exhaust much of your assets and if both you and your spouse happen to need care, it’s not a far fetched thought that you could end up spending it all on care, leaving you with very little or nothing left to cover living expenses in retirement.
Predicting your health isn’t feasible, but there are ways to know whether or not you are at a higher risk of needing care than others. To assess your risk, read our latest post. If you are interested in learning more about how to buy Long Term Care Insurance, click here.