How Lucky Are You?

Odds are, most Americans will need long-term care at some point.
By Mike Ashley,  Senior Benefits Consultant, Inc.

It never ceases to amaze me that individuals and many financial planners apply a totally different set of risk management principles to long term care than they do for other types of risk. Life insurance is a sure bet.
As long as the policy is in force, there is a 100% chance that you will qualify to collect at some point.  Outside of that, other risks to our financial well-being require an evaluation of risk vs. reward.

According to the Department of Health and Human Services (2006), 70% of all Americans who reach age 65 need long term care at some point in their lives.

Now, compare this with other risks that people insure for without even giving it a second thought.

• Losing your home to a fire  -  1 in 1200
• Car Accident  -  1 in 240
• Hospital stay costing over $30,000  - 1 in 15

According to the latest Genworth Cost of Care Survey, the current cost in the Kansas City area for a private room in a nursing home is $50,000 per year and is projected to be $254,000 per yr. in 30 yrs. Home health care, for just an aide, is currently $48,000 per year and projected to be $210,000 in 30 years.

If a couple, now age 55 both required 2.5 yrs. of care (avg. length of care) at age 85, the cost would be in the neighborhood of $1,300,000.00.  A lot of people certainly do have sufficient assets to cover this kind of expense. The question is “do you want to”?

Consider that a policy covering the cost of 3 yrs. of care for couple age 55 would run about $2400 per year or $200 per month.  If the $ 1.3 million generated .002 % interest, this would cover the premium, leaving the $1.3 million intact.

We all need a little luck now and then. But you might not want that to be your only long-term care strategy.