We Ask Tom if Long-term Care Insurance is Something for the Average Person?
Transcript:
Tom Vaughan: Okay, so she’s asking is should the average person have long term care insurance?
Wow, this is great question. In fact, I just had a situation with a client come up where she is not doing spectacularly health wise. So she could end up in long term care. She’s had a long term care policy for 15 years. And they keep increasing the cost. And the latest letter that she got was that they were going to increase the the premium by 40%, which is unbelievable. And so what’s happening, unfortunately, in the area of long term care is more and more people are using it. And all of these insurance companies have been selling, you know, the policies to younger people, like this lady 15 years ago, when she didn’t need it.
And now a lot of those people are getting into, you know, long term care, and they’re having to pay out. So I think it’s very fascinating, the best answer to that really, is to take your financial plan, you know, like we do, and put in long term care costs, you know, some projection, like I say, six to 15,000 a month, is probably a good range. And you know, pick a time period, how long it would last and see what happens to your existing plan. And especially if you have, you know, a spouse or significant other, how does that impact them? Does your plan still work? Or does it wipe it out, if it wipes it out, you really got to consider some way to protect that. And that would be the long term care insurance, even if it does cost something, or a lot, it might be worth you know, protecting that that other person.
But when you really look at it, then you can run the numbers, you know, where you say, Okay, now we’re going to run a plan where we put in the cost of long term care, we put in a really high increase on that cost for the rest of your life. And we reduce the you know, because Long Term Care Insurance Policies generally have a cap, certain number of dollars per day, total cap for the for the policy, you can get bigger amounts for more premium, obviously, but you manipulate that inside the plan, and you can tell whether or not a long term care insurance policy is going to be a really good deal for you or not. And that’s it.
So are you self funded? In other words, you know, do you have enough money, so that really the policy isn’t needed? It’s not going to be a huge damage situation? Or do you need the light long term care insurance policy to make sure that things work out, and there’s just so many variables, if you’re single versus being you know, with somebody else, you know, what happens to your home is that your long term care insurance policy, you’re going to rent it out and fill in the gap, you know, so again, it’s really fascinating area to take a look at. And it really, it needs to be looked at fairly closely, you know, early, doing at the last minute, you won’t have as many choices. So getting that set up in what you’re going into long term care, that’s probably going to be a really difficult time to get a policy obviously. But that that’s a really complex area altogether.