Long Term Care Insurance Decision – Should You? Which One?

In the vast world of all kinds of insurance products, include finger insurance for a pianist, long term care insurance often takes the back burner because it is typically not considered until later in life and thus “skips the mind” per se.

I was recently involved in the process of researching, screening and executing a long term care agreement for my aging parents.  Because my parents are not formally educated, and because they are immigrants who moved to America rather late in life, they rely on their kids (me) for these matters (and rightfully so).

So in this guest post I will share what I have learned about long term care (LTC) insurance and some of the best companies out there offering it.

Long Term Care Insurance: What Is It?

LTC insurance mainly helps pay for long term care needs such as nursing home admission for senior citizens or in home health care assistance as one gets older.  Because most of us don’t really think of LTC day to day, most of us have no true idea of how much this type of care can cost.  We all typically do agree that it is EXPENSIVE.

And with average life expectancies on the rise, I learned in my research that more than 50% of Americans will spend at least part of their golden years needing long term care. Sure, medical care is better and we are more aware of what we eat and what it does to us, but no one can defy the law of nature; aging and a deteriorating physical condition.

As I was researching cost trends, I came to know that approximately 12 million Americans needed LTC about 12 years ago, with the average cost at $50,000 per year.  Inflation adjusted cost in today’s terms is roughly $75,000.  This number is projected to rise to near $300,000 in another 20 or so years. Yup, I too was shocked and in recovery mode for at least 8 minutes after reading that fact. I just couldn’t digest it.

The bottom line of all the research led to me acquiring a LTC policy on behalf of my parents.  Why did I decide to do this? Because they fit three key criteria which I hope you find useful:

1. LTC insurance is not for someone who has gobs of money (which in my estimation is $2M or more in today’s dollars), or for someone who doesn’t have a lot of wealth / assets. The premiums are hefty!  My parents fit this criteria.

2. LTC insurance can be bought at anytime, but after numerous consultation sessions with “experts”, the best time to buy seems to be between 55 and 65.  My parents fit this range.

3. Finally, there are many companies in this space.  You shouldn’t even consider any company that has less than an A+ rating.  You can independently validate each company’s rating and don’t have to rely on what they tell you.  Why does this matter? Highly rated companies do not tend to sneak in steep price increases in your premiums. Second, you want these companies to be around to fund your LTC needs if and when you need them.

Finally, the best three companies that I concluded on after conducting all the research are Mass Mutual (A++), Northwestern Mutual (A++) and State Farm (A++).

I did call USAA (A++) as well and loved everything about what I heard. Unfortunately my parents do not qualify as they don’t have military history. I on the other hand, because of my military history, will likely subscribe to USAA’s plan if and when time comes and I feel I need / want it for my wife and I.

I tried my best not to recommend any specific company because I am not affiliated with anyone.  But I hope the three guidelines proved useful.

Readers: What’s your take on LTC insurance? Do you / will you have one? Why or why not?

Sunil owns over a dozen profitable niche websites and is the author of “How to Go from $0 to $1,000 a month in Passive and Residual Income in Under 180 Days All in Your Spare Time”, a FREE report you can download instantly from his Extra Money Blog, where he discusses how to create multiple streams of passive and residual income, entrepreneurship, internet marketing, blogging and personal finance. In 2007, he sold his ecommerce website for $250,000 to a top Ebay Power Seller and since then has sold several niche sites for five figures each. You can read more about him and his work on his blog.