Jul 09 2008

Long-term care insurance

Shane’s employer recently added optional long-term care insurance to the company’s benefits package. We’ve looked over the literature, and even though the premiums would be fairly low because of our age, we don’t think we want to buy policies.

Long-term care insurance pays for nursing home or in-home assistance if you need it.

My favorite financial adviser, Dave Ramsey, says to buy long-term care insurance when you hit age 60 and not before.

I wish he explained more why people shouldn’t buy it sooner. Perhaps he believes it’s best to focus your money toward getting out of debt and saving for retirement at that time.

We’ve decided to revisit the matter in 20-30 years. Our premiums would still be relatively low, and we’ll have a better gauge of how our investments and savings have performed.

Have you considered long-term care insurance? What did you decide?

9 Responses to “Long-term care insurance”

  1. Suze Orman had a Baby Boomer show this past weekend, and recommended the same age as Dave Ramsey (I think she actually said 59 1/2 years old). She was explaining that with the average age to enter a long term care facility being 84 years old, 59-60 years of age is an appropriate time to start looking into buying long term care insurance. That the odds of needing to use the insurance before that age are very low, and the money spent on monthly premiums could be better used elsewhere- retirement fund, investments, etc.

  2. My business professor used to say that his long term care insurance company was called “My Children.” Obviously that’s just the ideal, but he did say that he thought it was wiser to make your own investments, since you might not ever cash in on the money that you put towards LTC insurance.

  3. On the other hand, the decent long term care and assisted living places I know of cost upwards of $3,500 per month and sometimes people end up there at a much younger age due to serious health issues like MS, rheumatoid arthritis, early onset Alzheimer’s or after being paralysed in an accident.

    A person could easily blow through all their retirement money, house proceeds and other life savings within a few years and then have to go somewhere else (i.e. much less nice) for a long time. Plus then there would be no money left for the spouse and kids.

    I’ve only had LTD (not quite the same) when it’s been included in an employer package (either mine or hubby’s) but it’s definitely something to think about.

    Shevy’s last blog post..Nothing New Under the Sun

  4. I haven’t given much thought about long term care insurance only because we seem too young for it. But it’s definitely something to think about.

  5. It really depends on if you have an increased risk of needing in-home care. If you have a family history of illnesses that might require in home care, it might be worth it (Parkinsons, certain cancers, ALS, etc.) Then again, depending on the policy, that might exclude you!

    It also depends on your “final wishes”. If your living will stipulates you want no heroic measures/DNR, obviously you are less likely to need long term care insurance!

    I guess it really depends on how much risk you are comfortable with.

  6. I just wrote up a post about insurance yesterday, and as you mentioned Dave Ramsey says to wait until you’re 60 to purchase it. I’m sure the chances of needing it up until that point are pretty remote, and I’ll be waiting until at least then to get it.

    Peter’s last blog post..Money Matters

  7. This was a concern of my mother’s actually. She purchased some at the age of, I believe, 57 or so…she got some deal thru AARP that locked her into a rate of something like $8.00 a month for life. She had originally planned to wait, she is a big Suze Orman fan and knew she recommended 59 1/2, but the lock in rate was so low she could not pass it up. I would say that would be the only reason to buy sooner. I agree the reason is probably because your money could be best saved/used elsewhere until then. But $8 per month is like skipping 2 starbucks a month!

  8. $8/month sounds like a great deal! That’s even less than the rate we were quoted (and we’re 23!).

  9. I think you should buy it young if you are in dangerous jobs though. Construction work and other dangerous jobs can, sadly, lead to terrible accidents requiring on-going care. Car accidents can also do bad things. Also the new “super bugs” can put you in care, but that’s being pretty paranoid!

    One POSITIVE note is some plans allow you to purchase coverage for relatives–I have long term care for my Mom [who is 72] at an amazingly low rate.

    Lisa’s last blog post..Preparing for Sunday

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Hey! I'm Kacie, wife to Shane and mother to Jonathan (7), Vivienne (5) and Amelia (2) . I write about my family's finance: how we save money, improve our spending, and plan for the future.

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