Long Term Care Insurance Costs
With exponentially increasing healthcare costs coupled with increasing life expectancy levels and the collapse of the employer paid retiree benefit system, retirees are expecting to live on 30 years or more post retirement, and shell out over $300,000 for lifetime healthcare costs. Healthcare studies are predicting that LTC costs are likely to triple in the first half of this century, while the numbers of people in need of long term care doubles. In short, it is becoming increasingly difficult, and costlier, to meet lifetime healthcare costs even as the chances of being in need of expensive long term care are no longer remote possibilities.
Long term care insurance protects your retirement savings from being wiped out by a crippling illness needing extended and costly care, such as Alzheimer’s disease. Healthcare costs make up the biggest portion of a retiree’s expenses. Long term care is something which is not covered by your healthcare plan, Medicare or Medicaid. By adding an LTC component to a retirement plan, you can ensure the safety of your retirement income, without having to pay for the costs using principal.
LTC insurance is an as yet underutilized policy by buyers on account of several factors, including the relatively high annual premium and an inability by policy purchasers to look so far ahead into the future where they are unable to take care of themselves.
This situation is changing rapidly, and LTC insurance is gaining a lot of currency, not only due to the reasons stated previously, but also due to the fact that Baby Boomers are driving a surge in demand for LTC insurance. People in their 50’s, fast closing in on retirement, have or are watching their parents go through the aging process. And they realize that they can no longer be assured of the same long term care, unless they have the resources to pay for it.
As of now, the annual premium for an LTC insurance policy is about $1000. While this is still much too costly, market forces are likely to drive these prices downward in the near future. Also to be noted is that, as of 2006, insurance companies are allowed to combine variable annuities with LTC insurance coverage. Thus, retirees can benefit from the annuity investments, while being safely covered against long term care costs. Please not that at present, LTC insurance is mostly offered as an insurance only product, but with this legislation, and market demand from retiring boomers, insurance companies are actively looking at integrating the benefits o investments with long term care insurance.
You are advised to consult with your financial planner and an insurance agent, while making decisions regarding LTC insurance policies.