Long Term Care Insurance

Long-term-care insurance may be an important part of your risk management program. As we age, we become more likely to need this kind of care.

It's important to understand that long-term care is not just nursing home care. It's not just for the elderly either, although as we age, we become more likely to need this kind of care.

Long-term-care insurance may be an important part of your risk management program. Do you need it? It will be a personal lifestyle decision because there are no fancy formulas with which to figure out whether you need this type of protection. In 1997, which is the latest data available, about 1.5 million of our elderly population lived in nursing homes. That's only 4 percent of the population age 65 and older. Of that number, three fourths were women. The number of elders in nursing homes has been declining, so the odds are small that you'll ever need this type of insurance. Nevertheless, read on.

Nursing homes are very expensive. According to the AARP, the average cost is close to $50,000 annually, and both the West and East coasts have a higher average of $72,000 a year. That's almost $200 a day.

The government encourages you to purchase long-term-care insurance because it would like to get out of the business of funding long-term care through the Medicaid program. Part of the cost of the premium is treated as a medical expense and is deductible if your are over age 40.

Many middle-class Americans try to make themselves appear to be poor so that they qualify for nursing home care, but from my experience, it's not worth it. If you have assets over $100,000 an own a home, buy the insurance. It's really cheap protection, If you are struggling to make ends meet in retirement, living on your Social Security benefits and a small pension, you don't need to struggle to pay for the insurance because the government will take care of your needs.

Annual insurance costs for the various kinds of insurance you need takes a big chunk out your cash flow each year. A smart financial consumer needs to figure out their insurance needs and them shop for the insurance.