Insurance Planning, Part 3: Long-term care insurance

November 17, 2020
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As you get older the risk associated with you dying decreases and the risk that you live a long life with more healthcare increases.

 

As you move into retirement with all of your savings, you are likely self-insured or are pretty close to doing so. If something were to happen to you, the people dependent on you would be okay. However, if you were to live another 30 or 40 years and then need to be in a nursing home for 3 or 4 years, the same might not be true.

 

In fact, about 70% of someone turning 65 today will need some type of care and the average time for care is 3 years – about 2 years for care in the home and 1 year for care outside the home.

 

What it is and when it pays out

 

This is where long-term care insurance comes in. Long-term care insurance can cover the cost of at home care, nursing care, hospice, and more – benefits that your health insurance does not cover. Typically, the policy pays out benefits if you are unable to perform at least 2 of the 6 activities of daily living – Bathing, Dressing, Eating, Transferring, Toileting, and Continence.

Self-Insurance vs. Long-Term Care Insurance

Pro’s of LTC

  • Ease of mind knowing you are covered
  • Potentially huge cost savings if you need care
  • Ability to not have adjust future spending or goals

Pro’s of self-insurance

  • Avoid costly insurance premiums
  • Spend the premiums on other things like travel!

 

Disclaimer:  Alex Voorhees and Reston Wealth Management do not provide legal, accounting or tax advice. This information is not intended to be a substitute for specific individualized insurance, investment, tax or legal advice. We suggest that you discuss your specific situation with a qualified insurance, tax or legal advisor. The opinions voiced in this article are for general information only and are not intended to provide specific advice or recommendations for any individual. The views, thoughts, and opinions expressed in this blog belong solely to Alex Voorhees, and not necessarily to Reston Wealth Management. To determine which investment(s) or strategies may be appropriate for you, consult your financial advisor prior to investing. No strategy assures success or protects against loss. You should consider the investment objectives, risks, charges and expenses of any investment carefully before investing. You cannot invest directly in an index.

 

  1. https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html