Lately, it seems like every financial talking head has been expressing concern about the rising cost of long term care and what to do about it. In fact, USA Today recently had an article along the same lines, how Caring for Elderly Parents Catches Many Unprepared.
The fact is, the cost of long term care continues to rise, and there is no reason for that trend not to continue as more Baby Boomers age and require care. Second, it is estimated that almost 70% of people will need some type of long term care.
While you might believe that you can count on loved ones to care for you once you reach this situation, you should keep in mind the amount of stress that this will put on them. Providing extended care for a loved one is an extremely stressful situation because it requires a great deal of sacrifice.
Whoever ends up caring for you will not have free time for leisure activities because of how much work is involved with becoming a full time caregiver. For this reason, you should come up with a way to hire a human services professional to take care of your needs.
What is Long Term Care Insurance?
First, understand the options you have available. Many people simply don’t understand that there are options available to address needs when it comes to care. You need to couple the needs you have, such as the professional noted above, with the resources available to you. This will provide a good match that will hopefully best serve everybody involved.
Long term care insurance is the option that many people consider, especially since paying for long term care can quickly wipe out a family’s savings. In fact, depending on the state you live in and the type of care you need, you could end up paying anywhere from $10,000 to $100,000 per year in out of pocket costs without insurance.
Having long term care insurance, on the other hand, can help protect you by covering these costs. Most long term care policies can cover anything from simple adult day care services, to full private room nursing facilities.
Is It Worth It?
Unless you have a huge nest egg that can support you and possibly your spouse needing long term care for an extended period of time, you should probably look into getting long term care insurance. As with most insurance policies, you will pay far less in premiums if you get it while you’re younger, rather than waiting until you are close to needing it.
The average long term care policy costs less than $1,000 annually. However, you should make sure that it covers everything you need, and a good rule of thumb is that the cost shouldn’t exceed 5% of your annual income in retirement.
Policies usually give you a dollar-per-day benefit, so look at what services in your area cost, and decide how much you need. You will also pay based on how long you opt to be covered, with longer coverage terms costing more.
However, at the end of the day, it can be worthwhile to have a long term care insurance policy. At the very least, it’s a definite must to spend a few hours looking into it and deciding if it’s right for you.