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Invest in long-term care insurance for greatest peace of mind

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Baby boomers are often surveyed about their ability to finance their retirement, pay for their children's college educations and many other high-profile subjects.

But a new study from the MetLife Mature Market Institute suggests there is an even bigger looming issue that could prove to be the biggest money issue later in their lives: long-term care.

As people live longer — life expectancy today is 78 years — the chances increase dramatically that a person at one point or another will require some type of assisted living in their homes or spend some time in a private nursing home. In fact, a person who is 65 today has a very good likelihood of living at least another 20 years or more. It is during those years that the need for care increases.

And rates for those services continue to rise faster than inflation. The MetLife study finds the cost for assisted living services rose 4.4 percent this year while private nursing care rose 5.6 percent.

For the San Diego County region, that means the cost of nursing care comes in at $87,235 a year while in-home assisted living services will cost an average of $41,724.

“The state of the economy, combined with rising health care and energy costs, are having a significant impact on long-term care rates," said Sandra Timmermann of the institute. "In fact, long-term care rates continue to outpace the medical inflation rate.”

Compounding the situation, modern medicine is providing treatments for diseases and conditions that previously had been terminal. As a result, many survivors are in need of care to help with many basic needs.

Paying for these services can be a make or break situation for many people in retirement. According to the American Association for Long-term Care Insurance, there are four options to consider for paying for these services: cash, Medicare, Medicaid or private insurance.

Medicare provides limited coverage for long-term care, and Medicaid only kicks in after a household has exhausted most of its savings and investments. That leaves long-term care insurance as a viable, often affordable option. The insurance typically covers such services as nursing home care, assisted living and adult day care.

Proposals have been floated to provide an extra level of service in Medicare to cover these costs, but private insurance is the best option today.

In addition, California is one of a handful of states to provide a long-term care partnership program that works with private insurance companies that provide coverage that is more affordable.

The good news for consumers is that there is plenty of competition in the long-term care insurance industry. Coverage can be structured in a number of ways with a menu of benefits that determine the price of the policy. However, the most important provision is to make sure the policy provides inflation coverage, as it is increasingly clear costs will continue to rise rapidly.

Bottom line, the greatest peace of mind that will allow for a comfortable retirement is to have the necessary health insurance to take care of medical needs. No family should feel protected without long-term care insurance as part of their plan.

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2 UserComments
Ron DeFreitas 9:47am September 29, 2012

Long term care insurance is often overlooked as I agree people think they don't need it. Research has shown that 70% of people will need it. Long term care can be paid with a single premium or flexible premiums, my agency provides multiple benefit options to cover an individual's needs. It includes a money-back guarantee, minimum death benefit and long-term care benefit guarantees. I highly recommend all consumers consider long term care and how having a policy can make life much easier for family members. Ron DeFreitas Agent/Owner www.gulfcoasteducatorsinsurance.com

Gene Pastula, CFP 10:43am November 5, 2011

It is good to see this issue being presented by a trusted, unbiased source. Unfortunately, few people take this seriously until a life changing health event occurs. They now can see vividly the risk they face but they can no longer qualify to purchase insurance to help pay the costs the will incur. Also, there are other solutions that have been available for over 20 years that are more appealing to many individuals, because they do not require the purchase of insurance policies that pay benefits only if long-term care is needed. Instead they provide substantial coverage if needed for long-term care or pay a respectable return on their premium deposits if care is never needed. Everyone should learn about these "linked-benefit" products.