When you consider that the average married couple will spend around $250,000 during their retirement years is it worth it to protect against that probable event? A married coupled age 60 with standard health will pay around $300 a month for long term care. Is that worth it? Some consumers object to long term care because they may never use it, so they lose it. There are alternatives with life and annuity products that offer living benefits, in this case long term care, that may have cash value results if the living benefits are used.
Here is something I present to my clients when we come across this issue: With a monthly premium of $200, and with an annual benefit of $48000, with the benefit inflating annually by 3%, we get these numbers:
Two years of premiums in, the benefits paid out will equal that amount in two months! Five years of premiums will be matched by three months of benefits paid out, with 10 years of premiums being paid back in five months of benefits. 20 years of premiums come back to you in a manner of 7 months of benefits paid out.
So, in a nutshell...should you need long-term care, and there is some data suggesting that you might, having some protection in the form of such a policy will give you options on where to go as well as provide a safety net for your assets that you worked so hard to amass at that point.
If the insured person uses the benefit at some point, long term care insurance is worth it. That is why premiums are going up, because the amount spent on policies up to now is not keeping up with the amount of payments made out. Some people get a policy that pays only a partial payment, and if family members are unaware of that, they may feel that the policy was not worth it. But they must take into account that it fit their loved one's budget, and paid out as stated in the contractual agreement. It is important to get advice on what features you select in a long term care policy, so that it will have the optimum value to you, if needed.
Syndicated Financial Columnist, Host of the weekly talk show Steve Savant's Money, the Name of the Game, Scottsdale Arizona
The #1 retirement risk is living too long. Life expectancy is extending into new mortality frontiers. New longevity risk will impact retirement accounts. But living longer will also increase the probability of seniors needing assisted living and/or nursing home care, an expense most seniors can't afford. The value proposition of long term care in the light of living longer may be significant if these trends continue.
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Two years of premiums in, the benefits paid out will equal that amount in two months! Five years of premiums will be matched by three months of benefits paid out, with 10 years of premiums being paid back in five months of benefits. 20 years of premiums come back to you in a manner of 7 months of benefits paid out.
So, in a nutshell...should you need long-term care, and there is some data suggesting that you might, having some protection in the form of such a policy will give you options on where to go as well as provide a safety net for your assets that you worked so hard to amass at that point.