Is Long Term Care Insurance Dead?
by Keith Klein
The sales of long-term care insurance care insurance have dipped in recent years, leading many to question the reasoning behind this trend. After all, the probability of needing some sort of long term care, whether the care would take place in a traditional nursing home, or more modern varieties such as alternative day care or living facilities, is over 50% for a couple.
According to those odds, it is mathematically a far less expensive decision, to purchase the long-term care insurance, when factoring in the costs that come with the alternatives.
The opportunity cost of a family member providing long term care can be great. Some factors to consider are:
- The loss of income from time spent away from one’s occupation during the period of care,
- The emotional impact of caring for a family member or spouse,
- Time away from one’s own family,
- …or any combination of these three.
These factors, when examined together, along with the monetary costs of providing care for a family member or loved one make it abundantly clear that long term care insurance presents a far better option.
So returning to the original question, why are we not buying long term care insurance?
The answer can be found in three parts:
- Premiums have risen, few products carry guaranteed premiums. Over the last ten to fifteen years, prices have continued to climb, while very few products on the market carry guaranteed premiums.
- The insurance itself is very complex. Consumers can become confused due to the complications in ensuring that all desired benefits are covered.
- Most baby boomers do not have enough money put away to take care of a long term care scenario, without decreasing their current standard of living.
So what can be done to make this insurance more affordable? The best way to address this issue is to work with an experienced producer that understands how long term care insurance works and can match up a plan with your needs, income level and assets.