Protect Yourself
If you’re fortunate, you’ll live
independently and in good health
throughout your retirement years.
However, if you ever need some type
of long-term care, such as a stay
in a nursing home, would you be
To answer this question, you’ll need to evaluate two
variables: your likelihood of needing long-term care
and the cost of such care. Consider the following:
• Someone turning age 65 today has an almost 70%
chance of eventually needing some type of long-term
care, according to the U.S. Department of Health and
Human Services.
• The average cost for
a private room in
a nursing home is
about $100,000 per
year, while a home
health aide costs about
$50,000 per year,
according to Genworth,
an insurance company.
Several years of longterm
care could seriously
erode your savings
and investments. And
Medicare typically pays
only a small percentage
of long-term care costs.
Therefore, you may want
to evaluate the following
options for meeting these
expenses:
• Self-insure: You could
“self-insure” against
long-term care expenses
by designating some
of your investment
portfolio for this
purpose. However, as
the above numbers
suggest, you’d likely
have to put away a lot
of money before you
felt you were truly
protected. This could
be especially difficult,
given the need to save
and invest for the other
expenses associated
with retirement.
• Long-term care
insurance: When you
purchase long-term
care insurance, you are
essentially transferring
the risk of paying for
long-term care from
yourself to an insurance
company. Some policies
pay long-term care costs
for a set number of
years, while others cover
you for life. You can
also choose optional
features, such as benefits
that increase with
inflation.
Most long-term care
policies have a waiting
period between 0 and
90 days, or longer,
before benefits kick
in. You’ll want to
shop around for a
policy that offers the
combination of features
you think best meet
your needs. Also, you’ll
want an insurer that
has demonstrated
strength and stability,
as measured by
independent rating
agencies.
• Hybrid policy: A
“hybrid” policy, such
as life insurance with
a long-term care/
chronic illness rider,
combines long-term
care benefits with those
offered by a traditional
life insurance policy.
So, if you were to buy
a hybrid policy and
you never needed
long-term care, your
policy would pay a
death benefit to your
beneficiary. Conversely,
if you ever do need
long-term care, your
policy will pay benefits
toward those expenses.
And the amount of
money available for
long-term care can
exceed the death benefit
significantly. Hybrid
policies can vary greatly.
A final point to consider:
Long-term care premiums
get more expensive as
you get older, so if you’re
interested in this type of
coverage, don’t wait to
compare policies.
Ultimately, you may
decide you’re willing
to take the chance of
never needing any type
of long-term care. But
if you think that’s a
risk you’d rather not
take, then explore all
your coverage options
carefully. There’s no
one right answer for
everyone, but there’s
almost certainly one
for you.
EVERYTHING money
AGAINST LONG-TERM CARE COSTS
Kevin Chancellor is a licensed financial advisor who
manages the Palm Bay branch of Edward Jones. He
specializes in helping individuals, families, and business
owners in the areas of retirement planning, tax savings,
estate considerations, and education savings. He
has served as board chair for the Greater Palm Bay
Chamber of Commerce and works with various charities
throughout the county.
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