To self-insure or to invest in long-term care insurance? Numerous alternatives exist, and neither option is superior to the other, to my amazement. Your long-term approach can evolve as your requirements and resources shift over time.
Numerous customers wonder if they should self-insure or invest in long-term care insurance. If you’ve done your math and can save enough to self-insure, you have to decide whether to retain all the risk yourself or split it with an insurance provider. Ideally, we’d like to avoid having to consider the worst-case scenario at all.
A wide variety of long-term care products are available from insurance companies (including LTC combined with life insurance or annuities), so it’s vital to think about what you want to cover and how much you can afford to pay monthly premiums. Since you can’t see into the future, this decision comes down to what gives you peace of mind in light of the numerous factors and unknowns, such as if and when you will require care and how much the insurance company may increase the premiums in the long run.
You should also check your eligibility for long-term care, as some pre-existing diseases may leave you uninsurable. (For instance, you can be denied if you currently require assistance with bathing and dressing because of a medical condition like Alzheimer’s or a kind of cancer.) Joint policy purchases between husband and wife may also qualify you for a premium reduction. Similarly, long-term care expenses and premium hikes can differ from one state to the next.
Some policies allow you to choose how you put your benefit money to use; for example, if you choose a $6,000 monthly benefit over three years, you’ll have a total of $216,000 in coverage at the outset. If you started receiving benefits this year and utilized the maximum amount each month, you would exhaust your benefits slightly over three years. You can extend your coverage by two or six years if you use only half of the monthly benefit.
A study conducted at Boston College found that for most insurance buyers, in-home care is the primary focus when considering long-term care coverage. Results showed that men and women aged 65 and up had similar risks of eventually requiring nursing home care, with 44% and 58%, respectively. According to the results, the average length of time a male spends in a nursing home is ten months, while a woman spends 16 months.
Although we cannot act as insurance brokers or offer specific recommendations, we can guide you through the options and help you weigh the pros and cons of each. Before making any changes to your current insurance, you should consult with your agent.