Long Term Care Insurance 101

Long Term Care Insurance:

• Helps preserve independence.
• Provides freedom of choice.
• Helps preserve a standard of living.
• Protects your assets.
• Keeps you from being a burden on friends and family.

The older you are, the greater the likelihood that you will need at least some long term care. According to the MetLife Mature Market Institute, the national average for a private nursing home room in the latest year available (2012) was $90,520 per year ($248. per day). The average hourly rate for a home health aide was $21 or $210 for a 10 hour day.

On the other hand:

• Common wisdom is that prime candidates for long term care insurance are people with assets to invest between $200,000 and the $2-5,000,000 range. People with a lower amount of assets generally can't afford the premiums and may qualify for Medicaid. People with assets over $2,000,000 can usually afford the necessary care depending on how easily the assets can be converted to cash.
• You should not purchase Long Term Care Insurance if you can't afford the premiums now or in the future. Premiums are likely to continue to climb. Even if a company has a history of not raising premiums, or only raising them a minimal amount, this does not guarantee what a company will do in the future. If you stop paying premiums, you lose all the money you've paid to date.

According to the National Association of Insurance Commissioners, you should also not buy long term care insurance if:

• Your only source of income is a Social Security benefit such as Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI)
• You often have trouble paying for utilities, food, medicine, or other important needs.
• You are on Medicaid.

Before purchasing a Long Term Care Insurance policy, consider the alternatives for paying for long term care. To learn more, see Alternatives For Paying For Long Term Care.

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