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Is Long Term Care Insurance Right For You?

Have you been thinking about purchasing a long term care insurance policy?  Many people in their 50's and 60's are struggling with this decision.  An estimated 47% of men and 58% of women may require some type of long-term care during their lifetimes.

One of the first decisions to make is whether or not you actually need long term care insurance.  For many people with significant assets, self-insuring makes the most sense.  They plan to use the growth in their own assets to fund their long term care insurance premiums.  It is difficult to estimate how much this will cost, as some people may just need in home care, and some may need specialized care in a nursing home that can average $8,000 per month in some areas of the country.  

When shopping for a policy, it needs to be affordable over the long-term.  It doesn't do any good to purchase the policy and then not be able to pay the premiums that may increase 5% annually.  Long term care policies do not have level premiums, so it is important to be able to afford these over the next 30 years if you purchase a policy when you are 60.  

Some people decide not to insure for the full cost of long term care, and may deduct social security income from their projected long term care expenses so that they can have a more affordable premium.  It is also very important to have inflation protection since a flat benefit amount may be inadequate when you need to use it down the road. 

There are also hybrid policies which have an insurance component to them, but these may be quite a bit more expensive.  They do, however, allow you to use part of the death benefit for long term care expenses, but you are paying for the security of having the death benefit.  With a stand alone policy, if you have paid the premiums for 30 years, for example, and do not need long term care,  you lose all of the money you have paid in.  With the hybrid policy, you are paying more, but your heirs do receive a death benefit if it is not used for long term care. It is important to consult an expert since long term care policies can differ greatly in their benefits and their costs.