Lately I have seen clients shown proposals to purchase Long-Term Care insurance with premiums exceeding $10,000 a year for a couple. This is ridiculously expensive for most couples in their fifties, and is probably because the insurance amounts are way too large to be appropriate.
Some insurance agents who “dabble” in LTC insurance products think that everyone needs enough insurance to cover the entire bill. Perhaps they themselves have zero deductible car insurance, which makes no sense either.
If we have a car accident, most of us have some deductible that we will pay before the insurance pays the rest. The larger the deductible, the lower the insurance premium. With most car accidents, our lifestyle does not drastically change, but when LTC is needed, it does.
If one of a couple needs LTC, they are probably not driving anymore. Thus fewer cars, less motorcycles, boats, campers, snowmobiles, ATV’s, etc. will be needed. There will be less trips to Branson, Disney World, cruises, even less going out to dinner when one has a difficult time going anywhere.
Professionals who specialize in LTC planning take these things into consideration. We try to help our clients predict how much of their monthly income is actually required to pay the basic bills, and with less toys and travel – how much of the bill for LTC they can pay out of pocket.
In addition to monthly cash flow, many people can also contribute the interest their savings earn, without touching the principal. Often, the total between available cash flow and monthly interest will cover a significant portion of LTC costs. Only the shortfall needs to come from LTC insurance.
Here is an example for a 65 year old couple. They want to be able to pay for home care and assisted living facility care without using up their life savings. If they do not need to support 2 cars, the extra Corvette “summer car”, the boat, and they understand that when one cannot travel, that expense drops to zero as well, they can pay the majority of the cost of home or assisted living facility care.
Many people plan for just those costs as very few people today need the care of a nursing home, especially if they can afford their home or assisted living care.
In their case it is determined that an additional $2000 a month from LTC insurance will suffice. At age 65 for each, and both in good health, they can purchase that coverage with a 10 year benefit when care is needed, including an automatic 5% compound inflation rider on the monthly benefit for less than $2000 a year each.
With the automatic, built in 5% compound inflation on the benefits payable, by age 85, a 10 year length of claim can give them over $850,000 from the LTC insurance to pay for their care.
Let’s review, at age 65 they purchase LTC insurance that will give them over $850,000 to pay for care over 10 years starting if care is needed at 85, for $1900 a year. Is a premiumk of less than $2000 a year expensive for that?
If you have been shown sky high premiums for LTC insurance, you need to shop around before you buy. Talk to someone who has over 23 years experience in planning for LTC, and can help you size coverage appropriately. Just give us a call at TheLongTermCareGuy.com at (920) 884-3030 or (800) 219-9203 and lets investigate. But don’t wait until your health fails, becasue then it may be too late, for you.