The main disadvantages of Long Term Care insurance would be that you would die before you were able to use it or that you would be blessed with a long and healthy life and never need long term care before you passed away. Other than that the disadvantages are that it is becoming more expensive and that fewer insurance carriers are offering Long Term Care insurance. Of course, the reasons for this are testimony to the need for long term care insurance, people are living longer and therefore more people are having some period of need for long term care and long term care facilities are getting more expensive.
I cannot think of any disadvantages of owning a long term care plan other than paying premiums and never having a claim. Of course, not having a long term care claim means you died without having your health decline to a point of needing assistance every day of your life. Most people would consider this a blessing. There are many disadvantages for not owning a long term care policy and needing daily help. This could result in signing over all of your assets to a nursing home and leaving your surviving loved ones with nothing to inherit. Or worse, not having enough assets to be able to spend your final days in a nice facility versus a government ran facility and dying with your dignity.
Agent Owner, Gilmore Insurance Services, Marysville, Washington State
What are the disadvantages to long term care? First and foremost, price. Not necessarily the price you pay now for the policy, but the future potential cost of the policy. No one can say with any certainty what the cost of an existing policy will be in 5 to 10 years. That is the only real disadvantage to a long term care policy.
Long Term Care has a few disadvantages. The first as the others have pointed out is the risk of the owner dying without using the coverage. The insurance company would collect premium for a number of years and never pay a claim. There are some alternatives to Long Term Care that could help with this issues such as the number of deposit products on the market. Companies like Lincoln, Equitrust and others offer plans that allow the consumer to simply deposit a lump sum of money with the carrier. They are given instant leverage on the lump sum toward LTC and a death benefit. For example 100K deposited may leverage to $220K for LTC and have an immediate DB of 150K. The negative is the client does not get any interest on the money but with the very low fixed rates of return on money today, that may be a better way to go. The plans come with an ROP rider so the money would be returned upon request.
The other negative (That I have seen multiple examples of) is a person that buys long term care and doesn't really have any assets to protect. Arguments could be made that coverage is still useful in this situation but its hard to justify paying the premium when there is no accumulation of assets for the policy to protect. The money being spent on monthly premium could be put to use in other places.
Last thought is LTC should be considered when you are in your 50's. It gets much more expensive once someone hits their 60's. Consumers also need to understand that it is likely the premium will increase down the road when the insurance companies applies for and is given a class action rate increase approval.
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The other negative (That I have seen multiple examples of) is a person that buys long term care and doesn't really have any assets to protect. Arguments could be made that coverage is still useful in this situation but its hard to justify paying the premium when there is no accumulation of assets for the policy to protect. The money being spent on monthly premium could be put to use in other places.
Last thought is LTC should be considered when you are in your 50's. It gets much more expensive once someone hits their 60's. Consumers also need to understand that it is likely the premium will increase down the road when the insurance companies applies for and is given a class action rate increase approval.