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“Do I really need to buy still another insurance policy?”

For many types of insurance, the need to purchase coverage is pretty much a given. Life, Health, Disability, Homeowners and Auto insurance all play a role in protecting against the risk of financial calamity.

But when it comes to Long-Term Care (LTC) insurance, there is no one right answer for everyone.

With the national cost of nursing home care averaging $75,000 a year and up,
Long-Term Care insurance has become a much-needed part of many individual insurance portfolios. Due to dramatic advances in medicine and a focus on personal health, Americans are living longer, increasing the odds of needing expensive nursing home or home health care at some point in their lives.

Who benefits most from purchasing Long-Term Care insurance?

Certain individuals may find LTC insurance attractive to purchase because:

• They don’t want to become a burden to their family if they need costly, sustained care.

• They recognize they don’t have sufficient assets to fund nursing care on their own without jeopardizing the financial futures of their loved ones.

• They can afford the premiums now during their working years, and are committed to continue paying them during their non-earning, retirement years. (Rule of thumb: The younger—and healthier—you are when you purchase LTC coverage, the lower the premiums. That’s why many financial experts recommend purchase of LTC insurance in your 40s or 50s, rather than waiting until later.)

On the other hand, some people are simply not likely candidates for Long-Term Care insurance.

• At one end of the spectrum are individuals without the financial means to pay LTC premiums on a sustaining basis. These folks will simply have to find ways to pay for nursing home care from personal assets, perhaps bankrupting their family in the process . . . or call on family members to provide care at home . . . or exhaust their finances and become a charity ward. Unfortunately, none of these options is particularly attractive.

• The other group of people who may not be good candidates for LTC insurance— high-net-worth individuals with sufficient assets to self-fund care. For them, a stay in a nursing home would not be the financial catastrophe it might be for others.

What’s ahead for LTC?

The subject of LTC insurance requires discussion, education and introspection. Long-Term Care insurance is a complicated product that is being impacted by healthcare reform, potential changes in Medicare and Medicaid, and a shifting marketplace. In fact, some carriers have decided Long-Term Care insurance is no longer profitable and have stopped issuing policies.

When considering the purchase of LTC insurance, ask yourself: What asset mix do I need to sustain myself and my heirs now and down the road? Have my life goals altered? Will I be funding college for a child or grandchild? Purchasing a second home? Preparing for an early retirement?

Then, the final question: “Do I really need this insurance?” With Long-Term Care insurance, you’ll want to determine the best answer for your circumstances. It’s likely there’s no easy “yes” or “no.” But it is a question that needs to be answered by everyone concerned with their keeping their personal fortune intact.

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