Insuring Against Prolonged Care Costs

Life expectancies are growing longer, and the risk of entering a nursing home after age 65 is now as high as 49 percent. The national average cost for nursing-home care is about $56,000 per year. By 2010, the cost is projected to grow to $90,000.

If your parents someday need long-term care (LTC), they might have to sell important assets such as the family home to raise money to pay the cost. To help prepare your parents for possible LTC expenses, you may want to consider purchasing a long-term-care insurance policy for them. LTC insurance offers one way to help offset some of the potential LTC expenses that you or your parents could otherwise be forced to pay out of pocket.

Basics of Long-Term-Care Insurance

Types of Care

Long-term care generally refers to services required by someone with chronic, non-rehabilitative medical conditions on a regular basis for an extended period. These services may include everything from assistance with bathing, meals, and medications at home to an extended stay in a nursing home.

An LTC policy can help pay for any of the three basic levels of long-term care. Basic custodial care is primarily for those who need help with daily living activities such as eating, dressing, and walking. Intermediate care provides rehabilitative care or occasional nursing care by medical professionals. Skilled care is for those who require the daily care of health-care professionals beyond the assistance that family members are capable of giving.

Costs

One common objection to purchasing an LTC policy is the cost. Policies can be expensive for older individuals. However, the annual premiums could cost roughly the same as a single month of care. Keep in mind that a policy can be tailored to an individual’s needs. For example, it could be designed to pay a high monthly benefit but last only a few years rather than a lifetime.

Research Extended-Care Policies Carefully

The financial burden of long-term care can quickly deplete assets that your parents had planned to use during their retirement. The appropriate policy can help protect those assets and help your parents — or you — pay for care if the need arises.