Long term care protection: An important part of investment planning

The most pressing financial concerns of many people tend to revolve around providing for their families, assuring adequate retirement income and preserving their estates for the future. However, few people consider what would happen to their families, themselves and the assets they have worked so hard to accumulate over the years if they were to require long term care due to a prolonged illness or disability.

Consider the following facts. According to the Health Insurance Association of America, approximately 50% of all people over 65 will spend some time in a nursing home during their lifetime. The average annual cost of nursing home care for one person is more than $50,000. Medicare pays for less than 2% of all long term care cases - including nursing home care, assisted living and custodial care - for a maximum of only 100 days. Medicaid pays for long term care only after an individual has spent his or her entire estate, qualifies as impoverished and is admitted into a nursing home that accepts Medicaid. For more on the expected costs of Assisted Living click here

Fortunately, there is a solution to assist in paying for these expenses and leaving more of an individual's estate intact - long term care insurance. Without long term care protection, expenses associated with assisting in the activities of daily living can drain - and sometimes even deplete - a person's entire estate, potentially putting family members into debt. Many people often think of long term care as something for "old people," telling themselves, "We don't need that now. We'll consider that later when we're older and get closer to needing it."

Unfortunately, this is far from the truth. While certainly appropriate for care of the elderly who require it, long term care is not something reserved exclusively for older individuals. In fact, 40% of all those who are receiving care are pre-retirement age adults, ranging in age from 18 to 64. Their needs were created by accidents, strokes, brain injuries or tumors, mental conditions, AIDS, multiple sclerosis, muscular dystrophy, or even early onset of Alzheimer's and Parkinson's disease.

When younger people need care, it is often truly financially devastating. For example, the average length of stay in a nursing home for a male younger than 59 is 3,840 days - that's more than 10 years and far longer than the benefits provided by conventional group or individual health insurance, including HMOs.

Moreover, a recent Gallup poll showed that 76% of Americans believed that they would never need long term care - no nursing homes, no assisted living facilities, no adult day care or home care. Yet the facts tell us that almost half of us will spend some time in a nursing home when we are older, while 72% of us will use home healthcare services.

In other words, long term care protection is important for everyone. When considering the purchase of this benefit, individuals should keep in mind that the best long term care policy is one that provides comprehensive benefits - covering all types of care, including at-home or adult day care, or care in an assisted living facility or nursing home. Benefits should be available for the care that is most appropriate for the individual's long term needs. The policy should also be adequate to cover the potential need, considering the daily amount and how long benefits may need to be paid.