Middle-aged people do not necessarily want to think about who is going to take care of them when they can no longer take care of themselves. However, insurance experts advise that age 50 is the best time to start thinking about weighing your options when it comes to long-term care.
“Most long-term insurance is nursing home prevention,” said Jesse Slome, executive director of the American Association of Long-term Care Insurance. “People don’t want to go to a nursing home, yet people are living longer and they will need long-term care.”
Slome says people have roughly four options when it comes to being cared for in their old age. Those are: family, savings, insurance and the government.
For people who do not want to burden their children, cash out their savings or depend on Medicare for nursing home stays, insurance is the only option.
“Needing care is the greatest single financial risk to their retirement savings and way of life,” Slome said.
A long-term care policy can cover home health care which helps people spend more of their remaining days at their home instead of a nursing home.
Industry experts agree that long-term care is most critical for women. Often, they are the primary caregivers to their husbands. It is not unusual for a woman to use the couple’s savings on her husband’s care and when it is her turn, there is nothing left.
Nancy Behrens, assistant vice president for State Farm Insurance, points out that 70 percent of patients in a nursing home are women.
“It makes sense when you look at the fact that women tend to live longer and they tend to be younger than their husbands,” Behrens said.
Long-term care becomes a question of how they want to live in their last years and how they want their family to live.
“There is the emotional toll on families of deciding that it’s time for mom or grandma to go into a nursing home and there is the financial toll,” Behrens said.
In addition to traditional long-term care, this summer, State Farm began offering an option on its universal life insurance where holders can draw up to 2 percent of the policy’s value a year to help pay for long-term care.
“This is where financial planning and help from an agent is key in helping people decide which product is right for them in planning for those years,” Behrens said.
The annual costs of nursing homes range from $37,000 a year in Texas, $45,000 in Illinois and Florida and $98,000 in New York City and the vicinity, according to the Long-term Care Insurance Planners.
When to invest in long-term care insurance is a matter of preference and planning.
“The 50s seem to be the sweet spot when you are still healthy enough to qualify,” Slome said. “When you start getting into your 60s, it becomes too late.”
About one in five applicants for long-term care are turned down by insurers, according to statistics held by Slome’s organization.
However, some insurance experts are saying people should not wait for their AARP card to come in the mail before they start planning.
The 40s are a better age when it comes to buying long-term care insurance because of lower rates.
Although the standard insurance variables apply, including the benefit period, inflation protection and company, a woman in her 40s can save an average of 25 percent on long-term care insurance than a woman in her 50s, according to Behrens.
Also, a catastrophic accident or a medical crisis such as a stroke or cancer could create a need for long-term care insurance for those who are younger. About 40 percent of people using long-term care insurance are under the age of 64, Behrens said.