How can I tell if I can afford a long term insurance?
Some people walk into my office wanting to buy an LTC polt but we find, when we look at their financial big picture, that isn’t right for them because they can’t really afford it over long haul. This insurance is meant to keep you from going the poorhouse in case of a long-term stay, not to put you the poorhouse just to pay for it.
If you sign up at fifty-four, have to be able to afford it—both now and in the years after you retire. It will do you no good to buy a policy at fifty-four retire at sixty-four, and find, at seventy-four, that you can longer afford the premiums. You would have been better off not longer purchasing the insurance in the first place but investing money instead.
There are policies available that have what is known as return of premium option. This option means that if you’d pai your premiums for a number of years and either don’t use the policy or can no longer afford it, you can get your premiums back. This sounds good, but this option will raise the cost of the
premium some 35 percent. In most cases you’re better off getling an LTC policy without this option and investing that 35 percent extra on your own.
How do you know if you can afford it? By taking a good hard look at your future financial picture. Make some calculations to see what would happen to your ability to pay for this insurance when you retire and no longer have a paycheck coming in. Ask yourself what would happen after retirement if your partner died: Would you lose a Social Security check? Does his or her pension stop or is it reduced? And could you afford it if the rates went up? The insurance agents you’re talking to should be concerned about these same questions as well, and run as fast as you can from anyone who begins to pressure you. If you can afford it, ETC insurance is great. If you can’t afford it well into your retirement, it won’t do you a bit of good.
If you can’t afford it, you can still be responsible to those you love. If you are worried about your aging parents, or when the time comes that you begin worrying about yourself, you can seek out the advice of an attorney who specializes in elder care. If your parents live far away, see an elder care attorney near where they live, not where you live, because the assistance available varies widely from state to state and even can vary from region to region within the same state. In any case, an elder care attorney will go over all the options available to you—and these keep changing—given your particular situation.