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Thinking about Long-Term Care Insurance When You’re Middle-Aged and Older

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Thinking about Long-Term Care Insurance When You’re Middle-Aged and Older

When people marry and have a family, they generally buy life insurance. They do so out of regard for their spouse and children and so that in case of untimely death, the family can still have income sufficient to maintain a high quality of life.

In addition to having a life insurance policy, if you’re over 40 or 50 and are already married, getting married or remarried, or single, there are other insurance considerations, including long-term care insurance, that require an assessment. These considerations need to be integrated into your overall financial planning – and probably your tax planning and advanced financial planning if you’re in the high-net-worth category.

Long-Term Care Costs

One of the important insurance considerations is increased long-term care costs. On average, a man who is 65 today will live to 83, and a woman of age 65 today will live to 85. Given ongoing health care advances, people who reach age 65 one or two decades from now might expect to live even longer. An increasing number of us will live past 100. A critical point is that many individuals and married couples will face five or ten or more years of long-term care expenses, and that represents a huge threat to their finances.

A long-term care insurance policy is supposed to mitigate that threat. But so many long-term care insurance product offerings are mediocre and probably aren’t a good choice for many people who’d like to get coverage.

Why is that, and what can you do? The accompanying short video addresses these questions. Below is a summary of some of its key takeaways to get you started.

Life Expectancy

Life expectancy, especially for health-conscious Americans, is growing. But so is the cost of health care, especially for people in their seventies, eighties, and nineties. All this makes it hard for insurance companies to guess what long-term care will cost twenty or more years in the future, which is typically when a new policyholder might be needing it.

The uncertainties in those cost projections and insurance underwriting have consequences for consumers. One is that although the premiums consumers must pay are supposed to remain level year after year, premium increases have happened repeatedly – usually ten or fifteen years after a policy is purchased, when people are in their seventies or older, retired, and living off their investments and Social Security. Another consequence is that most policies have caps on the length of time you can draw – most around three years, some for five years, and some shorter-term policies for around one year. And still another consequence is that there’s typically an upper limit on monetary claims.


So what can you do?

  1.     There are still some long-term care insurance products that offer ongoing benefits with no time limit. Look for those products.

  2.     To maintain the purchasing power of the insurance benefit – which, again, most people are buying for twenty or thirty years in the future – look for provisions for cost-of-living protection.

  3.     Look for a policy that guarantees a fixed number of unchanged, level premium payments, with the benefits guaranteed and not subject to future premium increases.

  4.     Consider life insurance for benefits similar if not identical to those of long-term care insurance. Expect tradeoffs if you go this route – possibly an inferior death benefit, an offering for chronic care instead of long-term care, or other compromises. But life insurance may represent a workable substitute strategy.

Interested in a free assessment? Please click here.