Americans enjoy a longer average lifespan than the majority of the world. The average female can expect to live to see her 85th birthday. Advances in medicine, technology, and science have allowed us to live longer, but at a cost. Illnesses that would have killed us a century ago can now be treated. A heart attack that would have caused death a century ago can now be managed with emergency medicine and the latest technology. All of this, however, has a financial cost. If you are fortunate enough to live through your golden years without the need for long-term care, then you will never need long-term care insurance. Unfortunately, there is no way to know who will and who won’t need long-term care. The cost of long-term care can run as high as $100,000 a year — and that’s in today’s dollars. If you have considered purchasing a long-term care insurance, or LTCI, policy, there are some things you should know before signing on the dotted line.
- A LTCI policy is typically expensive. Although there is no “average” premium amount, you can easily expect to pay $500 a month. Make sure you can afford that now, and after you retire before you commit to buying.
- Research the company well to make sure they are financially sound. Look for a company that has been in business for at least five years and that does not have complaints with the state department of insurance.
- Make sure you know what is required before the policy will pay out–what conditions must be met before they consider you to be in need of long-term care.
- Make sure you understand the policy benefits. How much will they pay out each year and how do they account for inflation or cost of living increases?
While purchasing a LTCI policy is certainly a prudent decision for many people, it is not the only planning that should be done in anticipation of a long life. A well crafted estate plan is also an essential part of planning for one’s future. It not only will address the disposition of your estate upon your passing, but can and should provide for management of your affairs in your later life whether or not you become mentally incapacitated. An often overlooked provision in estate plans is giving one’s designated surrogate (whether it be a trustee or agent under a power of attorney) sufficient powers to engage in Long Term Care planning, which are essential powers to assist people in obtaining valuable public benefits that are available. It is best to work with an experienced and qualified estate planning and elder law attorney who understands how to incorporate these planning tools into a comprehensive plan for the future.