Long Term Care Insurance-the Choices Are Complex

The New York Times on December 18, 2015 ran an article about LTC insurance. Long-Term Care Insurance Can Baffle, With Complex Policies and Costs opens with this compelling statement: “[insuring] for long-term care is a lot like trying to cover the future financial impact of climate change. It’s a universal problem that looms large, is hard to predict and will be costly to mitigate.”  The article provides a critical look at the need for long term care insurance and the hurdles that are faced by those considering the need for long term care.

[I]t is a notoriously confusing and not always reliable product. That’s why few people turn to such insurance. Some 70 percent of those over age 65 will require some form of long-term care before they die, but only about 20 percent own a policy.

Instead, millions of those who end up needing long-term care pay for it out of pocket or, after impoverishing themselves, turn to the government for support.

The article takes a look at the costs of the policies, when coverage kicks in, and the limitations of such insurance.  The article offers some suggestions for those considering such a policy and concludes with  some food for thought:

As if these questions weren’t difficult enough, there are also estate planning considerations. You may want to leave something to your heirs and not want to see your estate consumed by long-term care expenses in your final years.

Several newer products called hybrids add on long-term care benefits to life insurance and annuities that may address this concern. But they add even more layers of cost and complexity.

For those in such situations, experts advise consulting an elder law attorney and fee-only financial planner who doesn’t make money from recommending the policies. That’s the best way to receive an objective — and nuanced — evaluation on whether this product makes sense for you.