A:

Long-term care insurance (LTCI) covers the risk that individuals may need medical and custodial care, either at home or in a skilled nursing facility, at some point in their life. Most workers wait to purchase an individual policy as they approach retirement or their group employer benefits are about to expire. Surprisingly (according to the Journal of Financial Planning, February 2009), nearly half of all group long-term care claimants in 2007 were under the age of 65. Costs ranged from $19,296 for in-home care in Louisiana to $177,634 for full-service nursing home care in Alaska. On average in the United States, you could expect nursing home facility care to run between $60,000 to $100,000 per year.

The cost of long-term care facilities and care has and will become even more expensive as our population continues to get older. One way to protect your family assets from being eroded by these costs is to purchase a long-term care policy. Even if you feel that you have sufficient assets saved to cover these costs, you may want to reconsider the benefit of having a LTCI policy as a hedge to protect your estate. If you or a parent are admitted to a nursing home facility at $80,000 per year, your assets would be depleted by $400,000 for a five-year stay in a facility.

When looking at the cost of LTCI it's similar to many other types of health and age related insurance coverages. The older you are and your current condition of health will play a huge factor in the size of your premium payments. Consider shopping for coverage while you are in your early 50s and in good health, you'll be able to lock in a cheaper premium and not have to worry about being denied coverage in the future for existing health issues.

Read Long-Term Care Insurance: Who Needs It? for more.

This question was answered by Steven Merkel.

RELATED FAQS
  1. Will Medicare pay for long-term costs?

    Long-term care refers to a variety of care services (medical and non-medical) that helps meet the needs of people who have ... Read Answer >>
  2. What is long-term care insurance?

    Long-term care insurance is an insurance policy that that helps a patient pay for long-term care. The policy usually covers ... Read Answer >>
Related Articles
  1. Financial Advisor

    How the Long-Term Care Insurance World Is Changing

    The long-term care insurance market is continually changing and prices routinely go up. This is an overview of what to expect when seeking such products.
  2. Financial Advisor

    How Linked Benefit Insurance Policies Work

    Linked benefit policies can be a viable alternative to traditional long-term care insurance. Here's how they work.
  3. Insurance

    How To Buy Long-Term Care Insurance Cheaply

    Consumers looking for long-term care insurance shouldn't have to pay full price. Despite the sometimes-hefty costs, there are ways to save on premiums.
  4. Insurance

    The Bad News About Long-Term Care

    The costs of long-term care continue to increase and most retirees can't afford to pay out of pocket for these services for an extended period.
  5. Financial Advisor

    Can Long Term Care Insurance Be Affordable?

    The cost of managed care and insurance covering it will only become more expensive. Here's how to help your clients formulate a plan.
  6. Managing Wealth

    How to Choose a Residential Care Home

    When an elderly loved one needs supervision, a residential care facility can be the closest thing to living at home.
  7. Insurance

    The Crippling Cost of Self-Insuring Long-Term Care

    Covering the cost of long-term care without insurance can deplete retirement savings quickly.
  8. Retirement

    Long-Term Care Expenses: What You Should Know

    Being prepared for long-term care is a critical element of financial planning. Here's what it costs.
RELATED TERMS
  1. Long-Term Care (LTC) Insurance

    Coverage that provides nursing-home care, home-health care, personal ...
  2. Skilled Nursing Facility

    A special facility or part of a hospital that provides services ...
  3. Long-Term Care Ombudsman

    A government official who oversees nursing homes and assisted ...
  4. Custodial Care

    Non-medical care that helps individuals with his or her activities ...
  5. Health Insurance

    A type of insurance coverage that pays for medical and surgical ...
  6. Medicare Star-Rating System

    A method for evaluating and ranking nursing homes used by the ...
Hot Definitions
  1. Blue Chip

    A blue chip is a nationally recognized, well-established, and financially sound company.
  2. Payback Period

    The length of time required to recover the cost of an investment. The payback period of a given investment or project is ...
  3. Collateral Value

    The estimated fair market value of an asset that is being used as loan collateral. Collateral value is determined by appraisal ...
  4. Fiduciary

    A fiduciary is a person who acts on behalf of another person, or persons to manage assets.
  5. Current Account

    The difference between a nation’s savings and its investment. The current account is defined as the sum of goods and services ...
  6. Liability

    Liabilities are defined as a company's legal debts or obligations that arise during the course of business operations.
Trading Center