Is long-term care insurance a good idea? If you are an insurance agent selling the policy, the answer is definitely yes. It is a lucrative source of revenue.
If you are a consumer, first ask the question, “Why would I need long-term care?” Most people feel they are being responsible by setting up long-term care because they assume they will require someone to look after them late in life. I would argue that most folks that end up with those needs are there because of their own choices much earlier in life.
The cost of long-term care is very expensive in many ways including financial cost. Too few people in their 30s and 40s begin to prepare for their health needs later in life. Many have a “default” mode of thinking when it comes to their health; since they are not presently ill, the assumption is that they are healthy. However, good health is a significant level above the absence of disease.
My suggestion to those giving forethought to later in life long-term care is that they invest now so that they can have greater than 95% probability that they will never be consumers of long-term care. One accomplishes this in much the same way as creating a retirement portfolio, except the investment is in one’s own health. Some of these thoughts may seem radical as we are consumed with making a living, but health can prove to be the best investment we ever make, with both a current and long-term return that is 95% guaranteed. Strategic time, effort, and money will pay a phenomenal return on investment.
“My suggestion to those giving forethought to later in life long-term care is that they invest now so that they can have greater than 95% probability that they will never be consumers of long-term care.”
In addition to investing in one’s health, it is prudent to build tax-deferred savings in a Health Savings Account (HSA) to cover those unanticipated expenses. This can be achieved by starting early with strategic planning, with the knowledge you will never lose a dime of your money. You can spend it as you wish rather than trying to qualify to access restricted insurance funds with limited benefits from an insurance company whose bottom line profit is inversely proportion to their payout.
I would advise reading the article “Do You Need Long-Term Care Insurance?” on the Web site consumerreports.org. Another good source of information is “Long-Term Care Insurance” at the aarp.org web site. These articles address some of the advantages, disadvantages, and pitfalls of buying the insurance. While these web sites provide good information, what they fail to address is that the choices we make regarding our health when we are well largely determines our need for such insurance in the long run.
To begin your preventative approach now and avoid the need for long-term care, read the books Younger Next Year and Younger Next Year For Women (both by Crowley and Lodge) and You: Staying Young: The Owner’s Manual for Extending Your Warranty by Roizen and Oz.