Syndicated Financial Columnist, Host of the weekly talk show Steve Savant's Money, the Name of the Game, Scottsdale Arizona
The number one risk in retirement is human longevity. The older we live, the odds become higher that we will need assisted or living and/or nursing home confinement. The costs for care are ever increasing, so it's important to protect your retirement income from the economic eroding affects of long term care costs.
Specialist, LTCi, DI, Annuities, Life, Designs In Life, LLC, Utah
Harry Crosby, a long-term care insurance (LTCI) agent, coach and trainer, has one of the best answers to this question that I know of. It's called "The Two Mistakes". In the interest of space, I have edited his take on this important question:
There are really only two mistakes you can make with long-term care insurance. Mistake number one: You get one of these plans. It doesn’t matter which one. You buy a plan, pay every year, live a long happy and healthy life, die in your sleep with a smile on your face and the money you paid in is gone. Right. The money you paid in is gone. Had you known that this would be the case, you would never have purchased a long-term care policy. Mistake number two: You stay self-insured, which is what you are doing right now. Then you (and possibly your spouse) need care. Not only do you pay for it yourself out-of-pocket, but the rest of the burden is placed on your family.
Let’s look at the two mistakes.
Mistake number one is that you get this plan, and your premium is about $2,500 a year. You live another 30 years, and at age 85 you die in your sleep with a smile on your face never needing a day of care and thus never getting a dime out of the policy. You get to the pearly gates, they look at your file, and they laugh at you because you made a $75,000 mistake for having this policy and never needed it.
By the way, that amount is less than one year of facility care in today’s dollars.
Now, mistake number two. You decide to not get this policy and pay the premium. Twenty years from now, when you are 75, you need care for just two years. You pay for the care out-of-pocket. Based on past trends, the average cost of future care will be about $350,000.
If you have to make a mistake, which mistake has the least impact on your family: the first one or the second one?
That is why top financial advisors and the federal and state government encourage people like you and I to look into LTCI. It is just common sense.
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There are really only two mistakes you can make with long-term care insurance.
Mistake number one: You get one of these plans. It doesn’t matter which one. You buy a plan, pay every year, live a long happy and healthy life, die in your sleep with a smile on your face and the money you paid in is gone. Right. The money you paid in is gone. Had you known that this would be the case, you would never have purchased a long-term care policy.
Mistake number two: You stay self-insured, which is what you are doing right now. Then you (and possibly your spouse) need care. Not only do you pay for it yourself out-of-pocket, but the rest of the burden is placed on your family.
Let’s look at the two mistakes.
Mistake number one is that you get this plan, and your premium is about $2,500 a year. You live another 30 years, and at age 85 you die in your sleep with a smile on your face never needing a day of care and thus never getting a dime out of the policy. You get to the pearly gates, they look at your file, and they laugh at you because you made a $75,000 mistake for having this policy and never needed it.
By the way, that amount is less than one year of facility care in today’s dollars.
Now, mistake number two. You decide to not get this policy and pay the premium. Twenty years from now, when you are 75, you need care for just two years. You pay for the care out-of-pocket. Based on past trends, the average cost of future care will be about $350,000.
If you have to make a mistake, which mistake has the least impact on your family: the first one or the second one?
That is why top financial advisors and the federal and state government encourage people like you and I to look into LTCI. It is just common sense.