|
|
Frugal
Living Thrift
Saving Money Penny Pinching
Home
Frugal Living Tips and Frugal
Living Articles for
Frugal Happy Families
|
Search Frugal and Simple Living Sites by Keyword
Below
|
Long Term Care Insurance can
be Critical
by Ozeme J Bonnette
I recently read an article that highlighted an
ever-growing group of people - centenarians. The number of people who live
beyond age 100 is rapidly increasing. With that in mind, I thought this would be
a good time to discuss long term care insurance.
The importance of long term care insurance cannot be emphasized enough. It
has been estimated that about half of people living today will need long term
care at some point in their lives. About 75% of people over the age of 65 will
need long term care.
In talking with many of my clients, the resounding majority do not want to
be a burden on their spouses or their families. Many also want to make sure that
illness does not deplete their retirement nest eggs. Long term care insurance
can help with both of these concerns.
What is long term care?
Long term care insurance is a type of insurance policy that allows you
access to funds to help pay for your long term care needs. As with other types
of insurance, the funds are available to you tax free.
When do I need it?
Long term care insurance providers will usually accept your claim if a
doctor confirms that you are unable to perform at least 2 of the 6 activities of
daily living. These are: eating, bathing, dressing, toileting, walking, and
continence.
The funds are then made available to pay for the assistance you need. This
assistance may come in many forms, including transferring to an assisted living
facility or having an in-home care nurse work with you in your home several
times each week.
How much do I need?
Individual needs vary. Looking at current expenses for long term care
providers can help you determine the amount of coverage you should have. For
example, the national annual average cost of a private room in a nursing home is
about $60,000. The estimated cost of a home care nurse is $19 per hour.
These figures should help you see the value that the policy can bring to
your household. Approximately 92% of long term care claims last three years.
Imagine that you are in that group. The cost of the nursing home for three
years would be about $180,000. That can severely deplete a retirement nest egg
and change the course of living for the future. The unexpected expense can wipe
out all retirement money. About 75% of single people and 50% of couples spend
all of their savings within one year of entering a nursing home.
What about inflation?
There are riders that can be added to the policy to ensure that the value of
your coverage keeps up with the cost of living. This is an extremely important
addition. Based on research from MetLife, the cost of long term care rose by
about 7% from 2004 to 2006.
We are living longer. Long term care insurance can reduce the chances of
depleting our retirement nest eggs. But more importantly, it may stop us from
being a burden on our spouses or our families and provide us with the comfort we
need during such a difficult time.
Ozeme J. Bonnette is a financial coach, speaker, and
author of Get What Belongs to You: A Christian Guide to Managing Your Finances.
Her focus is on increasing financial literacy among adults and youth around the
U.S. She earned 3 Bachelor's degrees at Fresno State, and her MBA at UCLA's
Anderson School. Her blog is
http://www.povertynorriches.com. Reach her at
ozeme@thechristianmoneycoach.com. |
Home
|
|
