Why Long Term Care Insurance? Who needs this coverage?
Short Answer: Everyone that has assets to protect and/or doesn't want to be a burden on their loved ones when they need care.
Of course, deciding if, when and with whom to apply for LTC Insurance is much more complicated. Most people would never consider going without Homeowner's Insurance, Automobile Insurance or, in most cases, Life Insurance. This leaves only one unprotected risk that could involuntarily deplete or wipe out their savings- long term care.
While the odds of dying during your working years, being involved in a serious car accident or having your house burn to the ground are slim; the consequences on your family and finances are severe enough to warrant purchasing the insurance. Long Term Care is different only in that an individuals odds of needing long term care are much higher. The statistics speak for themselves. According to the State of Massachusetts, once a man reaches 65 years of age, there is a 33% chance he will require nursing home care at some time in his life. For women, the number is 52%.1 This does not include those who receive long term care at home or in an assisted living facility. In most of New England, nursing home care averages over $100,000 per year. Aside from paying this amount out of pocket, the only alternative is Medicaid. In order to receive Medicaid, you need to spend through ALL of your assets and completely impoverish yourself. For people with a home, savings, a retirement portfolio etc. this is not a viable option.
For many people, knowing that there is a substantial likelihood that they will need care is enough to persuade them to purchase Long Term Care Insurance. There are, however, other factors to consider in this decision. So far, we have focused mostly on nursing home coverage. However, a growing majority of Long Term Care Insurance Claims are for services received in the home. Some carriers report that over 80% of the claim dollars they pay out are for home care. Given the choice, most people would prefer to stay in their own home to receive care. As a result, they will often rely on their loved ones to help with their care. This can take an enormous toll on the caregiver. Those who have a long term care policy that includes home care, can use the policy to pay people to provide care in their homes. Some carriers offer care coordination services to assist with the implementation of home care.
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