Is Long Term Care Insurance Worth Your Pennies?

According to Richard W. Johnson and Janice S. Park, most American will need to purchase Long Term Care Insurance for a lot of reasons. One of the main reasons that insurance companies claim that LTC insurance is suitable for senior citizens is because government insurances will never be enough for them. Because Medicare and Medicaid (government insurances) will only cover medical expenses and not living expenses coverage; this will force many senior citizens to consider buying long term care insurance to be part of their retirement's benefits. A great example that Johnson talked about on the article is the fact that most senior citizens are never prepared once they suffer a chronic illness in their lives. Because most elderly people cannot survive on their own once they are past 80 years old, they will more likely need assistance from their family members and supplemental government insurances. As an agent, I see more disadvantages than any positive side on LTC insurance. Like any side of the coin, there will always be major advantages and disadvantages for having long term care insurance . As an agent, I would actually lean toward the negative side of the coin because of the numbers of previous forecasts done on Long Term Care insurance. Most financial advisors will say that elderly people will need to start planning their futures once their early 40s and they need to consider whether LTC insurance is a great choice for retirement or long term investment. They need to learn to administer their finances and choose what their best choice is when it comes to retirement. They need to invest their money wisely on something that has greater return other than LTC insurance. Marketing keeps bombarding senior citizens to take control of their unpredictable lives by not just depending on public insurance like Medicare and Medicaid. Like most agents, they will always lean toward their personal goals and close the sales, even though, they know that LTC insurance is not a great product to offer. Most agents may display the fear to senior citizens that they cannot just exhaust all our expenses and live out of medicare or Medicaid only. Based on the article , "The cost of long-term care services, especially nursing home care, can be staggering. In 2010, the private-pay rate for a semiprivate room in a nursing home averaged $205 per day, or about $75,000 per year, and the hourly private rate for home health aides averaged $21 (MetLife Mature Market Institute 2010)" With the high cost of long term care in today's society, most elderly people do not see long term care insurance as an investment; but rather a burden once they see that they cannot longer afford it.

According to the article, it states that "policyholders cannot collect benefits until their disabilities reach the levels specified in their contracts and their disabilities are expected to last at least 90 days, or that they need regular supervision because of severe cognitive impairment." Based on the author's statement, you have to be on long term disability, in order for you to be able to use your long term care insurance. Another disadvantage of the long term insurance is that premium will always depend on the age of the senior citizen, which in turn; most senior citizens are unable to pay for the insurance once they turn 80 years old. Statistics show that current unemployment drive the general population, especially those who are retired or unemployed to be more careful with their finances. Most of us will not see long term care insurance as a financial investment.

Insurance companies will always try to market their products to the target markets in such a way that people will fall into the lie. One of the most famous ads is the one where senior citizens will spend the rest of their lives in a nice residential nursing facility. Reality is that, once a senior citizen cannot afford the high cost of Long Term Care insurance , they will end up on the streets or living on the roof of a family member. Again, because it is so hard to predict finances once you turn 65 (retirement gap), you have to decide whether the LTC insurance is a great benefit for yourself. Senior citizens will not want to spend their rest of their lives in a nursing home because it can be pretty depressing to them. Most of times, they are forgotten by their loved ones if they happen to spend a brief moment of their lives in a nursing home or residential nursing facility. Last but not least, with the high cost of long term care insurance, most elders will not be able to spend more than two years in a nursing home and this is the same assumptions for someone that sudden lose their homes because they cannot longer afford their mortgage payments. As an agent, I would definitely advise my clients to think about it and if they definitely see that LTC insurance is something they can afford, then go for it with the risks that the policy has. Nevertheless, they will be reminded that once policy lapses, insurance company will not be able to pay any benefits to policyholders. As the article stated, "no wonder why private insurances only cover 7% of total long term care in 2009" Chances are that most benefits that long term care insurance offers are so hard to achieve, that it would pretty much be a better investment for someone to invest their money in something else rather than LTC insurance. While income goes down, insurance premiums will more likely go up because of age. Insurance companies will be unwilling to lose their profits for the sake of providing a nice residential nursing facility to a member. Chances are if senior citizens get paid for their benefits; it will more likely be something less than the actual cost of actual nursing facility. As you know, Medicare always pick up the provider bill and it will only pay enough to the billing providers and not what they bill for, while Medicaid only pick up any remain balance that Medicare did not cover. Senior citizens should be pressured to buy LTC insurance products that they will probably ever need or cannot even afford.