Sometimes when you are trying to be financially responsible you have to think about other people’s finances.
For my younger readers, think about your parents. What if Dad reached the unfortunate medical situation where he couldn’t take care of himself? Does he have the money to put himself in a home or pay for a caretaker? Do you want to drop everything in your life and start taking care of him? Do you want to foot the bill for his care?
You might consider nipping this problem in the bud early by talking to your parents about Long Term Care Insurance.
Long Term Care Insurance (LTCi) is a little complicated, but it basically provides payment for the care of anyone who cannot take care of himself. Different companies have different policies so you’ll have to do your own research, but it could be worth it.
Should My Family Get LTCi?
It’s hard to tell if you or someone in your family needs long term care insurance, but personal finance journalist Chris Farrell gives a helpful rule of thumb his article about LTCi:
A rule-of-thumb is purchasing a long-term care policy isn’t worth it for those with relatively few assets, say, less than $250,000. Odds are they’ll eventually turn to Medicaid if necessary. People with more than $2 million in assets have the financial means to self-insure. But rules of thumb are only a starting place for research. Look at your full financial picture — assets, income, and expenses.
That is a very broad, general rule so it’s important to know that it takes more research to figure out if you need LTCi for your family or not.
Get In Early for Low Premiums
The key to getting affordable premiums for LTCi is to start the policy when the insured person is in relatively good health and isn’t too old (late 50s or early 60s). If your dad is 80 years old today there’s a good chance the insurance would be so expensive that it wouldn’t be worth it.
The key to keeping your premiums low is to get in early and then make sure to stay enrolled in the plan. Just keep paying those premiums and eventually it will probably pay off.
Do The Research and Make the Right Decision
No one likes paying insurance premiums, but paying a bunch of money for your parents to receive care instead of saving for your own family and retirement is even worse. LTCi will be right for some people but not for others.
Readers: Have you ever considered LTCi? Do you have a policy for you or a family member? Why or why not?
Kevin McKee is an entrepreneur, IT guru, and personal finance leader. In addition to his writing, Kevin is the head of IT at Buildingstars, Co-Founder of Padmission, and organizer of Laravel STL. He is also the creator of www.contributetoopensource.com. When he’s not working, Kevin enjoys podcasting about movies and spending time with his wife and four children.
I bought LTC insurance when I was in my early sixties. I was and am still very healthy. My motivation was to preserve my savings. I saw my mother’s savings dwindle paying for her care.
The issue is whether it’s right to force ppolee to participate in a health insurance program when they don’t want to.You want to great. And I think everyone who wants to participate should be able to get affordable health care.But if someone doesn’t want to participate, and the govt takes their taxes away for a program they’ll never use that’s just another example of govt-mandated theft.
Thank you so much for this post! I had never heard of LTCi, but this article prompted me to do further research (I am only 30 years old, but my parents are in their mid-sixties and I had them in mind for now).
I’m not currently able to afford this insurance for either of my parents, but maybe in the future my sister and I would be able to split the cost. And of course, it may be a good option for me in thirty years, depending on how times change.
I witnessed both of my grandmothers (single women) blow through hundreds of thousands of dollars in their final years in caregiving expenses (and that was with my father watching over them for 8 hours per day– there were still 16 hours left, which meant that we still had to pay two full-time caregivers). I didn’t mind that there was no inheritance left to speak of, but it bothered them both greatly (since they intended their savings to help the younger generations of the family), and my parents also had high levels of stress, wanting my grandmothers to live as long as possible but having no idea how to support them once the savings were gone.
I’ll be interested to come back and read comments that are posted, and hear what other readers have to say about their experiences with LTCi.
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Take a look at the British Health service, it\’s hliorbre and rationed. It\’s literally second rate health care in a first world nation because of the socialist model that has been a failure since the beginning. The people over there make jokes about the health service.In Germany when you turn 70 they throw you away. A family member of mine has nothing wrong with her but one knee, but they would not fix it because of her age. We brought her over here to the states and had her a new one put in within a month. First class American-style medical care.
Great question, Taylor, and different advisors counsel their clients in different ways. Some advisors will tell you to wait until you are sixty, i.e. Dave Ramsey. Two points to consider. 1. The younger you are the less expensive your premium will be. There is a tremendous difference in premium between someone who is forty and someone who is sixty. 2. If you have a change in health prior to applying for insurance, however, the chance of being insured is significantly less. For example, my mother was diagnosed with COPD at age 55. She was 57 when I moved back home to be an informal caregiver. By age 60, she was uninsurable. EVEN MORE IMPORTANT THAN THE CONSIDERATION OF PREMIUM IS THE CONSIDERATION OF INSURABILITY. The younger you are the better your health. The better your health, the greater the chance of getting a preferred health discount. The younger you are the more feasible it is to look at a limited pay option. So many more options for you to choose from the younger you are.
Please contact me if you would like to discuss this furtherj or get a no obligation quote. I work exclusively with long-term care insurance planning. kevincain@houstonltcspecialists.com. Kind regards, Kevin Cain, CLTC and 8 year caregiving survivor