As a baby boomer, now might be the perfect time to consider long term care insurance for yourself. Why? Because costs of care continue to climb. Look at these stats: The cost of a nursing home today is about $71,000 annually, or about $200 a day. The cost for assisted living is about $32,000 a year or $88 dollars a day. And home care price tags are up about 13 percent.
Gerri Wills of CNN money.com has some great advice regarding this special type of insurance:
1. Consider your candidacy: The reason you buy long term care insurance is to protect your assets in case you need to pay for assisted living, home care or a nursing home stay. If you have over $250,000 or more socked away or maybe your parents live too far away for your own comfort, you may want to explore long term care insurance options.
Most people start looking into these policies in their 50s, when premiums are generally lower, says Matt McGrath of the wealth management firm Evensky & Katz. A 50 year-old may pay $2,000 for a policy, while a 70 year old could pay $8,000 or more.
2. Be a smart shopper: Fewer and fewer insurers are offering long term care insurance. There were over 100 companies offering this insurance. Now there are only about 5 or 6 big players, says Fred Brock, author of “Healthcare for Less than you Think.”
That’s because it’s not easy to predict what healthcare costs will be like. The company will need deep pockets. You’re best bet is to go with a well known company.
You also want to make sure the company has not had to raise premiums drastically. As boomers age, more and more companies who haven’t priced out premiums well enough are finding they need to adjust their figures higher.
3. Get the right policy: When you buy a long term care insurance policy, you’ll also want to invest in an inflation rider. Healthcare costs are expected to increase increases between 5% to 7% per year. The average stay in a nursing home is about 30 months, so you may get a policy that will give you benefits for 3 years.
But if you think you’re likely to need more insurance, you can get benefit payouts for 10 years or more…but your premiums could more than double.
Planning for the future includes a well thought out risk mitigation plan. Long term care insurance should be a part of that planning for a significant number of baby boomers.
Have a great day!
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