Long Term Care Insurance or $79,935 for Nursing Homes?

Posted in Life Insurance

December 8th, 2009

Like everything else these days, aging has high costs associated with it. If you are fortunate enough to have the money to afford the average annual nursing home expenses of nearly $80,000, or make so little money that your state or local government will pay for the expenditure, consider yourself lucky. If you are part of the middle class, that financial burden will fall upon you as half of all people in assisted living must pay for these costs out of pocket. Only when an individual exhausts their own resources will the government kick in to pay the rest.

Long Term Care Insurance Basics

Long term care insurance will help provide relief from nursing home expenses if you think you may need to pay for it. According to a recent article on GoInsuranceRates.com, the average cost of assisted living and nursing homes is on the rise with the average equaling:

• $219 per day or $80,000 per year for a private room in a nursing home
• $3,131 per month for a private room in an assisted-living facility
• $21 per hour for a home health aide.

Is Long Term Care Right for You?

Deciding whether or not you should purchase long term insurance takes a lot of careful thought and planning. According to the AARP, the association for the Advancement of Retired Persons, some points to consider regarding whether or not to purchase long term insurance include:

• Family: If you or your parent are in need of specialized care, what are the financial resources in place to handle the expenses? Without long term insurance all available resources will all be tapped until government assistance kicks in. Single people have less to worry about in this situation.
• Associated Costs: AARP states that “people with less than $500,000 in investments [net worth not including home value] might not be able to afford LTC coverage.” Above that point, long term insurance should be considered. However, if a single person has over $1 million in assets ($1.5 million for couples) then “self insurance” or paying for the care yourself may be the best financial move.
• Family Health History: By looking to the past regarding the health of your grandparents and parents, you may be able to get some idea for the future of your health.

The best time to work on your long-term life planning is when you are healthy and able to make careful decisions about it. Taking the time now to crunch the numbers and to see if you can afford the annual $79,935 for nursing home care and comparing it against long term insurance costs will help you to prepare for the future.