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 >>
  3. What role does the agency problem play in the modern Health Care industry?

    Read about the role of the principal-agent problem in the modern American health care industry, and learn why health insurance ... 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

    Advising FAs: Explaining Long-term Care Insurance to Clients

    As our life spans are extended, our family structures change and medical care improves, the need for long-term care (LTC) will continue to increase.
  3. Financial Advisor

    Long-Term Care: How and Why You Should Plan for It

    The likelihood of needing long-term care is higher than most people realize. Here are some ways to plan for it.
  4. Financial Advisor

    Taking The Surprise Out Of Long-Term Care

    Don't be caught unprepared - find out what to look for in LTC insurance policies.
  5. Insurance

    Long-Term Care Insurance: Who Needs It?

    No one is immune to the possibility of one day needing long-term care - and the costs can deplete a life savings.
  6. 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.
  7. Insurance

    Long-Term Care Insurance: What to Consider

    Long-term care may be a wild card in your financial plan, but at the very least, it should be discussed with your financial advisor.
  8. 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.
  9. 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.
RELATED TERMS
  1. Long-Term Care (LTC) Insurance

    Coverage that provides nursing-home care, home-health care, personal ...
  2. Long-Term Care Ombudsman

    A government official who oversees nursing homes and assisted ...
  3. Skilled Nursing Facility

    A special facility or part of a hospital that provides services ...
  4. Custodial Care

    Non-medical care that helps individuals with his or her activities ...
  5. Nursing Home Placement Service

    A business that specializes in helping families and patients ...
  6. Health Insurance

    A type of insurance coverage that pays for medical and surgical ...
Hot Definitions
  1. Mobile Wallet

    Mobile wallet is a virtual wallet that stores payment card information on a mobile device.
  2. Leverage

    1. The use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment. ...
  3. Trumponomics

    Trumponomics is a term for the economic policies of President Donald Trump.
  4. Universal Health Care Coverage

    An organized healthcare system that provides healthcare benefits to all persons in a specified region. Many countries, such ...
  5. Davos World Economic Forum

    The annual meeting of the World Economic Forum hosted at Davos—a small ski town in Switzerland—in January each year is among ...
  6. Smart Home

    A convenient home setup where appliances and devices can be automatically controlled remotely from anywhere in the world ...
Trading Center