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Long Term Care Insurance

Updated on April 4, 2014

Some people think that Long-Term Care insurance is unnecessary. They think that all they have to do is transfer their assets to their beneficiaries and let the government take care of them.

There are some problems with this type of thinking. First of all, I question the morality and legality of hiding assets. I also wonder why you would want the government to take care of you. You see how well they handle everything else. Having Long-Term Care insurance will protect your assets as well as help get you into a private healthcare facility where they will probably do a better job of taking care of you.

I also wonder why people don't want to pay for their long-term care. They realize that they have to pay for a meal if they go to a restaurant or get their car fixed or get their hair cut. It's the same basic principal with healthcare. You are getting a service so you should be willing to pay for it.

When should you take out a policy? It is unwise to take out a policy when you are 40 years old because you most likely won't need health care for a long time. When you get into you mid to late 50's would be a good time to get insured. Statistics indicate that you most likely won't need a healthcare facility until sometime after the age of 60.

You have various options as to what type of Long-Term Care insurance that you can get. A simple 3 year basic policy will probably only run $60-$70 per month. But you don't really want that because those policies usually have little or no inflation protection. There are policies where you can piggy back with your spouse. You can have a 4 year policy and your spouse a 4 year policy. If your spouse has to go into a healthcare facility for 6 years, they can use 4 years from their policy and 2 years from your policy. Of course that means that you only have 2 years left so that is kind of risky.

Something else that you need to be aware of is and inflation clause. Some policies may have an automatic 5% inflation rate each year for your coverage. The problem with that is healthcare costs are rising faster than 5% per year.

In my opinion you should get at least a 10 year policy and preferably a lifetime policy. Be sure that it has an inflation clause that says the policy will cover you regardless of the inflation rate. That way if healthcare costs rise at a 12% rate, you will still be covered. Granted, this type of policy will be more expensive but it will be well worth it if you ever need long-term care.

So are Long-Term Care policies necessary? I think if there is anyway you can possibly afford it, definitely yes.


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