David Parker is an attorney who specializes in Estate Planning and Elder Law and has been practicing law for 30years. Be it Wills, Trusts, Powers of Attorney, Health Care Proxies, orMedicaid Planning, David provides comprehensive and caring counsel for seniors and their families. A large portion of David’s practice is asset protection strategies so that families do not lose their hard earned savings to nursing home care costs. He also handles probate administration for the settlement of estates.
The expense of living in a nursing home for one year, is more than the total of all the premiums a person will ever pay for LTC coverage.
Suze Orman offers unapologetically blunt advice about why you and your family might want to consider long-term care (LTC) insurance. Suze learned the hard way how much years of long-term care can cost through an experience in her family. She is convinced that, even with the problems the LTC policy industry has experienced over the years, you should take a look at this type of coverage. Here is a summary of some hard talk from Suze Orman about long-term care insurance.
A Two Million Dollar Mistake
Suze tried to get her mom to sign up for an LTC policy, when her mom was young enough to qualify. Suze offered to pay the premiums, but her mother refused to sign the application. For the last seven of her mom’s 97 years, Suze shelled out more than $20,000 a month for her mother’s assisted living and specialized aides. Thankfully, Suze could afford to drop more than $2 million on her mother’s care. Not many of the rest of us could afford this astronomical expense.
Suze knew how expensive long-term care can be, which is why she pleaded with her mother every year to let Suze buy LTC coverage for her. She saw people lose their life savings paying for home health care or the nursing home. It is particularly sad, when the expenses for one spouse gobble up the retirement savings, leaving the surviving spouse broke.
Do the Math
The premiums for LTC coverage have increased dramatically. A policy that initially cost $2,000 a year, might cost $4,000 a year now. Before you walk away from LTC coverage, think about what you get for that increase in premium.
Home health care will cost, on the average, $4,000 a month. Nursing homes can cost $8,000 a month or more. An entire year’s LTC premium costs only one month of home health care or two weeks of nursing home costs. The expense of living in a nursing home for one year is more than the total of all the premiums a person will ever pay for LTC coverage.
There is no logical reason to believe the cost of home health care or long-term care will decline over the coming decades, when you or your loved one might need these services. If you decide not to buy LTC insurance and just cross your fingers and hope for the best, you need to realize the costs you might have to pay out of your retirement savings could be significantly higher than the current average costs of home health care and nursing homes.
Of course, if the trends continue, the premiums will continue to increase. Suze recommends people only buy an LTC policy today, if they can easily continue to pay the premium if it increases by 40 percent over the coming years.
You should not buy an LTC policy if paying those premiums will mean you cannot afford to save money in your retirement accounts. LTC coverage only pays a benefit to people who need home health care, nursing home, or another form of covered long-term care. Your odds of living to retirement age are far greater than your odds of needing long-term care.
The general law of this article might differ from the regulations of this article. You should talk to an elder law attorney in your area about whether LTC insurance would be a wise addition to your estate planning. This article is not an attempt to sell LTC insurance or any other type of insurance.
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Suze recommends people only buy an LTC policy today, if they can easily continue to pay the premium if it increases by 40 percent over the coming years. You should not buy an LTC policy if paying those premiums will mean you cannot afford to save money in your retirement accounts.
Long term care insurance is expensive and premiums can go up. That's often a big, unpleasant surprise for many people. Many assume they were locked into a premium amount when they got their long term care insurance policy.
Suze Orman recommends that generally most people should get a 20 year term life insurance policy at 20 times your annual income. What does that mean? That means if you're 30 years old and you make $50,000 a year you should get a million dollar 20 year term life insurance policy.
Premiums can increase: Long-term care insurance may be affordable, and even inexpensive now. But premiums for this type of insurance can increase over time. So be sure you understand that going into the process. That said, rate increases may be rare, depending on your provider.
Today, most insurers have stopped selling stand-alone long-term care policies: The ones that still exist are too expensive for most people. And they have become less affordable each year, with insurers raising premiums higher and higher.
LTCI is relatively expensive for retired people on a fixed income. Some argue that if you have more than $1 Million Dollars in assets, you don't need it. If you have less than $500,000 in assets, you can't afford it. That argument may be true.
So, 35% will use their coverage and 65% will not. As you might assume, the decline is because during those first 90 days, some people will recover and some will die.
Life insurance can provide peace of mind at any age, but isn't always necessary after age 60. To see if you need life insurance, assess your family's needs, your financial resources and assets, your outstanding debts and your long-term financial goals.
Suze Orman is right. In order to retire early, you need at least $5 million in investable assets. With interest rates so low, it takes a lot more capital to generate the same amount of risk-adjusted income.
20-year term life insurance is the most popular term length and can help cover the income of new parents or newlyweds as their family grows. 30-year term life insurance can help cover large, long-term financial obligations, such as a mortgage or college debt.
Long-term care insurance typically doesn't cover care provided by family members. It also usually doesn't cover medical care costs—those are typically covered by private health insurance and/or Medicare.
Home care is not covered or. Home Care Only. These policies are required to cover Home Health Care, Adult Day Care, Personal Care, Homemaker Services, Hospice Services and Respite Care but care in a Nursing Facility or Residential Care Facilities/Residential Care Facilities for the Elderly is not covered or.
Permanent life insurance policies build cash value, which you can tap to cover expenses other than long-term care. Stand-alone long-term care insurance policies don't have cash value.
The bottom line. If you are under age 50, it may not always make sense to buy long-term care insurance. You can compare prices and see what you might pay when you are ready, but if you buy coverage too early, you may end up paying premiums for much longer than you need to.
Who Has Private Long-Term Care Insurance? Among adults age 65 and older, 12.4 percent (or 4.8 million adults) had coverage. Only 3.0 percent of African Americans age 55 and older and 2.4 percent of Hispanics were covered by private long-term care insurance.
Your age: Costs increase as you age. The younger you buy coverage, the less you will pay for coverage initially. Your health: If you have pre-existing conditions, long-term care insurance companies may deny coverage or charge you more coverage than a healthier person.
Advantages of long-term planning include better anticipation of future challenges, while disadvantages include potential inflexibility and difficulty in adapting to changing circ*mstances.
Long-term care costs are high and ever increasing. And while it's impossible to predict when or for how long you might require such care in the future, long-term care insurance can provide you and your loved ones with peace of mind while safeguarding your assets and savings.
You may want to look up, from an independent rating agency, the financial strength ratings of a company you're considering. Percentage of income - Keep the premium for your long-term care insurance policy to 7 percent of your income, or less.
For long-term disability insurance, Dave Ramsey suggests a benefit period of at least 5 years and up to age 65 if you can cover that financially. You may be wondering what will happen after those 5 years? The truth is that 85% of disabilities resolve themselves within 5 years.
Introduction: My name is Pres. Carey Rath, I am a faithful, funny, vast, joyous, lively, brave, glamorous person who loves writing and wants to share my knowledge and understanding with you.
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