When LTC Insurance Makes Sense


Long-term care insurance is a touchy subject. It exists as a way to mitigate the expense of long-term care, which can be financially devastating to a person or family if the person needing care requires specialized care for a number of years, or if the person needing care was a primary wage earner for the family.  Many individuals forget that long-term care doesn’t only apply to the elderly, but also to anyone who may be seriously injured or have some type of disability.

Because of the high cost of medical care in the United States, long-term care insurance is very expensive and costs continue to increase each year.  Many individuals mistakenly think that all long-term care needs will be paid for by insurance, however most long-term care stays are not covered by insurance.  

Most Americans do not purchase LTC insurance. Some wealthy investors believe they have the assets necessary to pay for care when and if the time comes, while others believe they can access the necessary funds from other savings vehicles such as retirement savings, while still others pray they will never need it. 

However, for those people who do purchase LTC insurance and then employ it for the purposes of paying for a loved one’s medical and nursing care bills, it can be a godsend.  The financial burden that is lifted for those who have long-term care insurance is immeasurable, and can allow families to preserve their financial legacy.

In recent Spectrem Group research, investors who have been instrumental in the care of a dying family member or who has participated in such care reflected upon how their role in the financial affairs of a dying family member influenced their own plans for preparing their financial matters for the inevitable.

Long-term care insurance is purchased by only 22 percent of wealthy investors, while another 17 percent intend to purchase it at some point in the future.  The most common reason why LTC insurance owners made the decision to purchase LTC insurance was to ensure they would not be a burden in the future to their children.  Fifteen percent made the decision to purchase LTC insurance after seeing a loved one’s financial life be impacted by a lengthy illness, with the individual wishing they had purchased LTC insurance. A third of investors who have long-term care insurance made that purchase based on guidance from their financial advisor.

Having responsibility for the financial situation of a loved one who has passed away also increases appreciation for LTC insurance among 30-35 percent among those individuals.  Among those investors currently dealing with the finances of a loved one who has not yet passed away, almost 40 percent reported an increased appreciation of LTC insurance.

The results of the Spectrem study show that when people are subjected to the situation in which a loved one requires medical care for a long time, LTC insurance becomes a good idea for anyone who is witness to that situation.