Skyrocketing senior care costs can ruin an estate plan by depleting assets. Long-term care insurance is a hedge against the cost of senior care. We insure our homes, our businesses, our boats, and even our lives. We buy insurance in anticipation of future risk – damage to property, loss of income, or loss of life. Long-term care is a grim reality for many people, yet many have not purchased or even explored their options for long-term care insurance.
The number of people who buy long-term care insurance is fairly low. The premiums may start high and increase as the insured ages. It is also sometimes difficult to qualify after age 50 or if pre-existing conditions are present. Still, long-term care insurance is worth exploring.
Long-Term Care by the Numbers
Before buying long-term care insurance, you may want to ask yourself these questions:
- What are the chances I will need long-term care?
- How expensive is long-term care?
About 52% of people age 65 right now will need some form of long-term care. That number is slightly higher for women – 57.5%. As you age, your need for long-term assistance may increase. For example, 10% of Americans age 65 suffer from Alzheimer’s disease, while 38% have it at age 85.
It probably will not surprise you to learn that long-term care is expensive. Although the cost varies widely from state to state, average costs in Florida as of 2020 are:
| At-Home Care | $ 49,764 |
| At-Home Health Aide | $ 50,908 |
| Adult Day Health Care | $ 18,200 |
| Assisted Living Facility | $ 52,785 |
| Nursing Home Care (semi-private room) | $100,087 |
| Nursing Home Care (private room) | $112,420 |
Potentially, many people will need to find a way to pay for long-term care. There are generally three ways to pay for this care: self-pay, government programs like Medicaid, and long-term care insurance.
Long-Term Care Insurance Options
Insurers offer a variety of insurance products to meet the diverse needs of their customers. Long-term care insurance is no different.
Many long-term care insurance policies are stand-alone, comprehensive coverage policies. Premiums are paid on a monthly, quarterly, semi-annual, or annual basis. Typically, this type of policy covers as many long-term care services as possible.
Some companies combine long-term care insurance with other policies. For example, an insurer may offer a rider to a cash value life insurance policy. However, the coverage received is usually very limited. Long-term care insurance can also be added to a disability income policy.
Another form of long-term care insurance uses a single premium deferred annuity. This requires a large lump sum payment when the policy is purchased.
Do You Need Long-Term Care Insurance?
That largely depends on your individual needs, your net worth, and whether you want to leave money for heirs. Even if you choose to purchase long-term care insurance, planning for long-term care should be an important part of your estate plan. Consult with an attorney about other options to pay for long-term care.
As a Florida attorney board certified in Wills, Trusts and Estate Planning, Attorney John Mangan can guide you as you consider long-term care insurance as a hedge against the Skyrocketing senior care costs. To schedule an appointment, call us at 772-324-9050 or fill out our Contact Form. Our office is conveniently located in Palm City, Florida.
For more information, visit:
Elder Law and Estate Planning: Preparing for Your Golden Years
4 Common Estate Planning Errors and How to Avoid Them
How to Plan for Incapacity or Disability
Warning: 6 Critical Factors for Parents with Minor Children, Part I
