Long Term Care Insurance or LTCI helps you pay for costs associated with nursing home expenses or home health care if you are sick or injured.
Over the years LTCI has gone from being relatively unknown and little used to becoming almost too popular. Insurance companies may have underestimated their financial exposure in this product, particularly those carriers who offered a lifetime payout benefit. American’s are living longer and the lifetime payout policies are putting a dent in some carriers finances.
Most, if not all, LTCI carriers now offer a limited benefit – say 2 years or 5 years. So at least they can know their exposure is capped.
Also, many players in the Arizona Long Term Care Insurance market have abandoned the product altogether. It has been reported that one large carrier to allegedly abandon this product in some markets is State Farm Insurance. We do not know for sure if this is the case but others are reporting it to be true.
The American Association for Long Term Care Insurance purportedly reported that the carrier had ceased selling the product in some states, including ARIZONA, California, Connecticut, Hawaii, Indiana, Nevada and New York.
What are the odds?
Statistics indicate that 70% of Americans will need some sort of long term care assistance for an average length of 3 – 5 years at a cost of $250,000 – $1,000,000. As with most insurance you never want benefits to ever kick in but in this arena the financial cost to you could be devastating.
The economy is playing havoc with insurance carriers and even that is affecting the LTCI business. Insurance carriers rely upon investment income. However, this low interest environment is hindering insurance companies from earning much needed investment income.
Other carriers are seeing strong interest in LTCI from 30% to 50% gains in applications being submitted.
Believe it or not, but insurance companies expect a certain number of clients to drop the insurance. So when 100% of new policy holders pay their premiums the carrier knows a certain number will quit paying at some point. Those become pure profits since the carrier did not pay any benefit.
However, what they have discovered with LTCI is that very few ever lapse their policies. As we age we realize the importance and need to have our health care intact.
Do you need LTCI?
If you have the income and assets to warrant protecting then you may want to consider investigating getting a quote. Consider if you need nursing home care for a couple of years. Imagine how much money you would need to spend out of your own pocket. Nursing home costs vary from state to state, and perhaps even city to city, but they have risen dramatically over the past 15 years.
Can you afford the premiums, which could be $2000+ per year. This is an estimate of course as the premiums are substantially cheaper for someone in their late 50’s versus a 72 year old.
Getting a quote is free. Matter of fact, contact any number of reputable companies and ask for an agent to come and explain the product and offer a quote. All of this is free. If you desire a recommendation of a great insurance agent who sells LTCI and who I personally know – please call me.
LTCI is heavily dependent on being in good health. So please do not wait until some health incident occurs in your life to being investigating your potential need. As is the case with most insurance (such as life, disability and health) always buy when you are in the best health possible. You will receive the best rate and lowest premium.
Do you need Long Term Care Insurance? Don’t let it simply be a financial decision. Again, if you have assets and investments that you want to maintain over the long term this is a product that you should indeed consider buying. If you need nursing home or home care at some point you will need to spend your own assets first. Once you have depleted your assets then government assistance may kick in. But by that point you are no longer someone with assets.