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I work for a financial services company (a situation soon to be rephrased in the past tense), and every once in a while, our businesses go on “road shows” selling their products to the employees, supposedly at reduced rates. This month’s product is long-term care insurance. This type of insurance pays for nursing homes and at-home care for people who are unable to care for themselves. I’m 34 years old, so I don’t foresee needing this type of care for a long time, if at all.
The Long Term Care Insurance National Advisory Center — an organization with an official sounding name, though I don’t trust their website without any official information about who they are — says, “By 2030 those needing LTC will skyrocket to 23+ million Americans, with projected, individual long term care costs reaching $300,000 annually per individual!” Even if there is some hyperbole here, inflation is always scarier when it’s applied to expenses.
That’s the risk with insurance: you spend your money now and over time, and you never need the service you purchased. This is why I don’t buy added warranty insurance when I buy electronic items — I rarely need to take advantage, but if I were to need, I’ll have self-insured well enough to handle the expense myself.
The best unbiased information I could find on long-term care insurance comes from a series of articles on CBS Moneywatch. I call this unbiased, but in a broader view, you can bet that any information coming from a financial publication is going to have advice falling in the direction of taking advantage of products offered by the financial industry. The analysis of pros and cons of a variety of methods of planning for long-term care seems fair.
From what I have seen, the cost of caring for an elderly individual with a condition such as Parkinson’s disease can deplete all of that individual’s wealth accumulated after a lifetime of working. The peace of mind gained from long-term care insurance — as long as the insurance does provide the benefits when needed — is worth the expense.
Updated January 20, 2012 and originally published December 1, 2010.