can fill in the gaps of your main health insurance policy. Primarily for older adults, it covers the costs of a nursing home, assisted living facility or live-in caretaker if you're no longer able to care for yourself.
"The cost of long-term care insurance varies widely, but it can range from hundreds to thousands of dollars each year," says Todd Wolfe, senior insurance associate at Telemus, a financial management company.
That's a pretty wide range and can amount to quite a bit — especially when you're on a limited income. Still, for some people, it's worth the cost. Is investing in long-term care insurance worth it in your specific case? We asked some experts for their take.
When is long-term care insurance worth it?
To get a feel for whether long-term care insurance is worth it, it's first important to understand what long-term care typically costs.
According to the Cost of Care Survey from insurance company Genworth, you can expect to pay the following for various long-term care services:
- In-home health aide or caretaker: $4,957-$5,148 per month
- Assisted living facility or adult day care: $1,690-$4,500 per month
- Nursing home facility: $7,908-$9,034 per month, depending on room privacy
One simple way to determine if the cost of long-term care insurance is worth it is to get some quotes and compare those to the potential costs that long-term care could come with. Does one far outweigh the other? If so, you might have your answer.
You should also consider your assets. Experts generally recommend having long-term care insurance if you have a healthy nest egg or "medium to large assets to protect," as Mike Raines, owner of Raines Insurance Group, puts it.
"Long-term care insurance is often worth considering for those wanting to shield their hard-earned assets from the significant expenses of extended care," Wolfe says. "Many individuals invest a lifetime into building their wealth and don't wish to see it consumed by care costs, potentially leaving nothing for their heirs as they had envisioned."
Those heirs — and anyone else you could potentially leave behind — are another consideration to factor in. Would you want the costs of your long-term care to fall on loved ones, should you need it? If not, long-term care insurance may be worth it.
"Long-term care insurance helps protect assets, provides choices, and reduces the burden on family caregivers," says Tom West, senior partner at Lifecare Affordability Plan.
When is long-term care insurance not worth it?
Long-term care insurance can sometimes be worth it, but not always. If you have certain health conditions or are on the older end, it might mean very high premiums, which could strain your budget.
"If your income is limited and the premiums would stretch your budget too thin, it might not be the best fit," says Jeff Rose, a certified financial planner and founder of Good Financial Cents.
It also might not be worth it if you have very few assets or income. In this case, there may be other options to help you handle the costs of long-term care more affordably.
"If you do not have many assets and are not in good health, then long-term care insurance may not be affordable or make sense since you may be able to qualify for other programs like Medicaid," Raines says.
Consider a rider
In the end, Rose says, "It's all about weighing the potential benefits against the costs and seeing what makes sense for your personal situation."
If you're still not sure whether to purchase long-term care insurance coverage, you might consider what Krystie Dascoli, voluntary benefits practice leader at the Marsh McLennan Agency, calls a "hybrid" life insurance policy.
"It's a multi-use policy that uses a life insurance chassis and includes a long-term care rider," Dascoli says. "What we like about this type of policy is that it will pay for something at some point. The policy will pay a death benefit, but it also includes a payment for someone who is terminally ill or needs long-term care. It also builds cash value and people can purchase the program from their employer with no medical questions. This type of a policy is a win-win for everyone."
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