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The cost of long term care varies for individuals living in different parts of the country, but the general consensus is that it is expensive, regardless of the level of care you receive.  For example, an estimated cost of nursing home care is between $30,000 and $50,000 a year or more, with most individuals staying an average of 2.5 to 3.5 years.  Costs of in-home care are harder to estimate and vary widely.  So how can you protect your nest egg and that of your loved ones?  Some turn to long-term care insurance for the answer. 

Long-term care insurance can help protect your assets against the potentially catastrophic cost of extended long-term care. Long-term care insurance is a protection plan that pays you a set amount when you can no longer live independently. It can help pay your nursing home costs, your assisted living costs, even your costs when you are disabled and confined to your home. Whenever you can't perform some of the essential activities of daily living  - eating, bathing, getting out of bed, going to the bathroom, walking, dressing yourself, etc. - your long-term care insurance will cover the cost of caring for you.

Only an insurance agent can tell you the exact cost of long-term care insurance coverage because the premium is based on:

  • Age: The younger you are, the lower your premium will be.
  • Your health: Your health at the time the policy is issued will affect your premium. Your premium will be higher if you have health problems.
  • Elimination period: Premiums are less if you increase the elimination period. The longer you can pay your expenses before benefits begin, the lower your premium.
  • Benefit amount and duration: A policy paying $50 a day for three years will cost less than one paying $100 a day for five years.
  • Other factors: Long-term care costs may vary greatly from one area to another. Where you live will affect the cost of your coverage. Optional benefits you decide to add to your policy also will increase your premium costs.   

Long-term care insurance usually makes sense only if you have significant assets to protect other than your home, car, and a small amount of cash.  For many people, this type of coverage may be too expensive, or the benefits you can afford might be inadequate to pay the full cost of your care.

It’s probably not a good idea to buy a long-term care policy if you have trouble stretching your income to pay for utilities, food, or medicine. If you do not have significant assets, you may have turn to Medicaid to cover your long-term care costs.

Only you, or you and a trusted financial advisor, can determine whether your personal assets, income, family situation, and personal risk factors justify the expense of long-term care insurance coverage. 

How can you save money when buying long-term care insurance? 

  • Buy sooner rather than later - The younger you are, the lower your premiums
  • Save Federal and State taxes - You may be able to deduct part of the premium with a tax-qualified policy as a medical expense. All policies sold on or after January 1, 1997, must be identified as either tax-qualified or non tax-qualified. All policies sold before January 1, l997, are automatically "qualified."  Check with your tax advisor.
  • Buy through a group -  If you are an employee, retiree, union member, or belong to an association, check with them to see if a group policy is offered.  Group policies often cost less than individual ones, but compare the benefits and cost before deciding.