The Long-Term-Care Insurance Decision

There are many decisions a person can have before them when planning how they are going to pay for long-term care in the future. One such decision whether or not to purchase long-term-care insurance.

When a person has a long-term-care insurance policy, if they end up needing long-term care they generally will receive reimbursement for the costs of such care (how much reimbursement and how long reimbursement will occur depends on the specifics of the policy), provided they meet the requirements of the policy.

One upside of having such a policy is that it can provide some significant asset protection in the event that one needs long-term care. High costs are very common when it comes to such care, so having portions of such care reimbursed can be very valuable and can sometimes protect a senior citizen from significant asset depletion.

One major downside of having such a policy is that such policies can be rather expensive, typically costing thousands of dollars a year.

Thus, it can be important to do a careful cost-benefit comparison when considering whether or not to acquire long-term-care insurance. Many different things can potentially have impacts on whether or not acquiring long-term-care insurance is the right choice for an individual, such as:

  • Their asset levels.
  • What sort of asset protection concerns they have regarding long-term care.
  • Their age. Generally, the older a person is when they acquire a policy, the higher the base rate for their insurance payments will be.
  • Their health status and sex. These are among the variables that can impact policy cost.
  • What other asset protections they have in place against long-term care costs, such as how they have factored the potential of long-term care costs into their estate planning.

This illustrates a general point when it comes to long-term care planning: there can be quite a few things to factor in when making decisions regarding such planning. Attorneys can help individuals acquire an idea of what things they should be considering when making long-term care planning decisions.

Source: CNBC, "Weighing the pros, cons of long-term-care coverage," Ilana Polyak, Jan. 29, 2015

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