The insurance industry feeds on our fears and insecurities – the fear of losing our precious possessions including our life, health and wealth.In order to protect all these, we buy insurance coverage. Sometimes, we end up paying high premiums just to get mental security without assessing if it is really worth it or not.
Long term care insurance policies are really very expensive and people still buy them. They have been led to believe that paying the premiums is much better than losing all your assets when you actually need long term care. Given the high cost of long term care policies, it cannot be said that everybody should buy a long-term care policy. It just may not be worth it for many people and they can look for alternative ways to cover their long-term care expenses – if they need.
How Many of Us Need Long Term Care Services
Insurance companies throw up scary statistics to coerce you into buying a long-term care policy.The situation may not be as terrifying as the projections and estimates of these insurance companies.The percentage of people who will need long term care after 65 years of age is roughly 35% for men and 65% for women. Even when they do, it will most likely be for short stays and not years. If a person has no resources to cover his expenses and can qualify for Medicaid, then his or her long-term care needs will be taken care of by Medicaid.
Long Term Care Insurance Quite Expensive
Since long term care services are expensive the insurance coverage is also very high. You have to keep paying the premiums till you use the coverage, which could be a very long time. Maybe you took the policy when you were fully employed and were earning a salary, but, when you have to continue the policy with very limited resources after retirement, it could seem like a huge burden and you may be compelled to drop it. All the money paid as premiums would go to waste. Generally, the premium should not be more than 5% of your income every month. You have to keep in mind the decrease in your income after retirement.
Alternative to Long Term Care Insurance
The need for long term care is still very real – you may be one of the unfortunate few who will need some form of long term care at some point in life. Regular health insurance policies don’t cover long term care services and the Medicare long term care coverage is very little. So, if you have the resources to pay the premiums now and in future, you can, by all means, buy a long-term care policy.
If your calculations show that you can spare some money to pay the premiums but you are not sure how long you can continue, you have two options. You can buy a long-term care policy with the least coverage and no additional benefits. Another option is to invest the money in a way where you can easily take it out. So, if you do need long term care, you can use your invested money to pay for the expenses. If you don’t need it, you keep your money.
When You Buy Long Term Care Insurance
There are many insurance companies selling long term care insurance policies. So, you need to be very careful before buying, be aware of the details of the benefits, go through the ratings and reviews. You should take advice from your financial planner before you buy such a policy.