Long Term Care Insurance: How Much & How Likely?

Before deciding how you feel about the odds that you will need Long Term Care, let’s quantify the financial consequences.  Even using the long ago outdated 2010 average cost for a private room in a nursing home of $229 per day the cost of care adds up quickly.  Do you have an extra $83,585 sitting around in case you need care for a whole year?  If so, keep on saving. The average length of time that care is needed is more than twice that long.

Men need care on average for 2.2 years.  That’s at least $183,887! (2.2 years = 803 days, multiplied by the $229 daily cost).

Women need care on average for 3.7 years.   That’s a whopping $309,150! (3.7 years =1350 days, multiplied by $229 daily cost).

Let’s examine how the consequences can change how we feel about the odds. Would a 30% chance of rain be enough to make you lug around an umbrella all day?  When the consequence is getting wet it doesn’t seem that 30% is very high at all.  Perhaps you have had similar feelings about buying Long Term Care Insurance.  If the chances of needing it are slim, why bother?  It can be eye opening to learn that according to www.longtermcare.gov only a lucky 30% of those turning 65 may never need it.  How do you feel about those odds?  Would you reconsider that umbrella if the forecast changed to a 70% chance of rain?  What if instead of rain, you were facing financial consequences that could easily add up to hundreds of thousands of dollars?

One final staggering statistic to consider: of the group that does need care, 20% will need it longer than 5 years! That would generate a bill in excess of $417,925.

Insurance isn’t always your best option.  As much as possible it is a wise decision to self-insure for smaller losses like a broken windshield or a stolen bike.  However there is a time and place for insurance!  It is best used as a wall of protection between you and catastrophic losses.

Now that you know how much it could cost, and how likely it is to happen, don’t let Long Term Care costs scramble your nest egg.  Invest in a big strong wall with a properly crafted insurance policy.