Is long-term care insurance a good idea?

Long-term care insurance can be an enormous help for some, but is not the right choice for everyone. While it was originally meant as a solution for middle-class people who earned too much to qualify for Medicaid but couldn’t afford to self-insure, LTC insurance is still out of reach for many, and only about 8% of Americans have a policy. In addition to concerns regarding cost, there is also a chance that one will never end up making a claim, causing years’ worth of premiums to go to waste.

In general, long-term care insurance is best for those who have assets exceeding the value of their home by at least $300,000 and/or who anticipate needing significant amounts of care in the future. Looking at it another way, LTC insurance may not be right for you unless your income is high enough that you will be spending less than 5% of it per month on premiums. Keep in mind that your income will probably decrease following retirement, while premiums will likely rise over time.

When determining whether long-term care insurance is right for you, consider what will happen if you forgo buying a policy but then need to pay for long-term care out-of-pocket later on. How will this impact other members of your family? Do you want to be able to leave an inheritance for your heirs? Take some time to look into your family history as well and see whether relatives required care, and if so, how it was handled. When in doubt, talk to a trusted financial advisor.

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Is long-term care insurance a good deal?

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