What Is Long-Term Care Insurance and Is It Right for Me?

We often find there is confusion regarding long-term-care insurance. Who should purchase it? When it should be purchased? Here is our four-point mantra on long-term-care insurance:

  1. Age 50 to 65 is the ideal time frame to consider long-term-care insurance; the earlier the better.
  2. Invest time to learn about long-term-care insurance, understand it, and decide if it is right for you.
  3. Apply to see if you qualify medically. If you don’t, your decision is made for you!
  4. Buy it or don’t buy it, but make an informed decision that you won’t look back on and question or regret.

But what is long-term-care insurance? It is not just nursing home insurance. You qualify for benefits if you cannot perform a number of “activities of daily living” such as getting out of bed, dressing yourself, feeding yourself, using the bathroom and bathing yourself.

Long-term-care insurance can therefore provide benefits at any age, whether a stroke, traffic accident or other event puts you in a situation where you cannot perform some of the activities of daily living.

Long-term-care insurance can cover services at home, in an assisted living center or a nursing home.

Here’s a real-life example: My step-father is in an assisted living center because we do not want him living at home alone―he needs help taking his medications on a regular schedule, and we want him to have some supervision, social opportunities and good meals. But he can perform most of the activities of daily living, so he would not qualify for benefits if he had a long-term-care insurance policy.

Consider your personal circumstances when thinking about purchasing long-term-care insurance: 

  • Are you married? If so, what is the age difference between you and your spouse? If you are both close in age, what would happen if you both needed care? If there is an age spread, could caring for the older spouse leave the younger spouse with fewer assets for their life?
  • How many children do you have, where do they live and how able would they be to help care for you? Would you want to move in with them?
  • Do you own a home that could be sold to pay for your long-term care?
  • Is the idea of needing care in the future and paying for it something that you worry about?
  • What is your family health history? Did both your mother and father die before age 75 or did they live past 90? What about your other relatives?
  • How is your current health? Are you an obese smoker with multiple health issues? Ironically, the healthier you are, the more likely you are to need long-term care insurance!
  • Are you comfortable relying on government plans or would you rather have individual coverage that may afford you more choices and flexibility?
  • Would you prefer to self-insure and rely on your savings and investments?
  • How important is it to you to leave an inheritance for spouse or children?

Remember, no one wants to live in a nursing home. No one wants to be infirmed or unable to take care of herself. No one wants their house to burn down, to be in a traffic accident, to get sick or to die prematurely, but that is why we buy home and auto insurance and health insurance and life insurance. The same principle applies to long-term care.

Your financial peace of mind will be well served by learning about long-term-care insurance and deciding if it is right for you.

About Bruce J. Berno, CFP®
Bruce J. Berno, CFP® is the founder of Berno Financial Management, Inc. a fee-only comprehensive personal financial planning and investment advisory firm headquartered in Cincinnati, Ohio. Since 1993, Berno Financial Management has been helping individuals and families achieve financial peace of mind. For more information about Berno Financial Management, visit http://www.bernofinmgt.com/.