Why Long Term Care Insurance:
It Seems Expensive
But be aware that long term care insurance is not cheap. Why?
* Fact. Insurers that sell long term care coverage expect that they will have claims on one out of every three policies they sell. By contrast, it takes, on average, about 1,200 homeowner's policies to generate one claim. Further, claims on long term care policies can cost insurers hundreds of thousands of dollars. Depending on how old you are and how much coverage you buy, long term care policies can cost anywhere from a few hundred dollars to several thousand dollars a year.
Because of the cost, the United Seniors Health Cooperative recommends you buy the coverage only if you meet these guidelines:
- You have more than $75,000 in assets per person in your household.
- Your annual income is at least $30,000 per person in the household.
- You can afford the premium without significantly changing your lifestyle.
- You could still afford the premium if it increases 20% to 30%.
Of course, you should talk to your agent about your options given your financial situation. In general, though, it probably doesn't make much sense to buy long term care before you turn 50.
You can buy policies with elimination periods of anywhere from 30 to 180 days or longer.
Another moneysaving option is to buy a policy that provides coverage for a limited time, say two to five years. This, however, might not save you much because most nursing home stays are less than three years.
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