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. Which insurance policies do I really need?

    Your needs for insurance depend on your situation and can't be generalized for everyone, but there are a lot of options available. ... 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. Insurance

    Long-Term Care Insurance: What You Need to Know

    Planning ahead for long-term care costs should be part of a financial plan.
  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

    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.
  5. Financial Advisor

    Long-Term Care: More Than Just A Nursing Home

    Learn what you can do now to keep your options open in the future.
  6. Insurance

    Long-Term Care Insurance: You Have Options

    The latest offerings provide more coverage and the ability to pick and choose what types of coverage you'll need.
  7. Retirement

    Failing Health Could Drain Your Retirement Savings

    You may not be able to prevent illness, but it doesn't have to infect your savings.
  8. Financial Advisor

    Long-Term Care Policies: Why They're Worth It

    Long-term care insurance can be a godsend for those who need it for an extended period of time. Read on for more about this long-term care option.
  9. Insurance

    6 Long-Term Care Insurance Mistakes to Avoid

    To get the most out of your long-term care insurance, avoid making these mistakes.
  10. Financial Advisor

    Top 10 States for Affordable Long-Term Care

    Every state varies on the average cost of long-term adult care. Here's a list of states where these types of services are the most affordable.
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. Medicare Star-Rating System

    A method for evaluating and ranking nursing homes used by the ...
  5. Certificate Of Need

    An endorsement required by numerous states before the construction ...
  6. Assisted Living

    A type of housing that combines healthcare and help with activities ...
Hot Definitions
  1. Promissory Note

    A financial instrument that contains a written promise by one party to pay another party a definite sum of money either on ...
  2. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
  3. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  4. Absolute Advantage

    The ability of a country, individual, company or region to produce a good or service at a lower cost per unit than the cost ...
  5. Nonce

    Nonce is a number added to a hashed block, that, when rehashed, meets the difficulty level restrictions.
  6. Coupon

    The annual interest rate paid on a bond, expressed as a percentage of the face value. It is also referred to as the "coupon ...
Trading Center