Is long-term care insurance right for you?

Barron offers the example of the late Christopher Reeve, an actor who became paralyzed after a horse-riding accident. "He was a young, healthy person who required long-term care for quite some time. We never know if there's going to be an event that comes up in our life. Assuming that your health is pretty constant, though, I think between the ages of 55 and 65 is ideal."

In deciding when to acquire long-term care insurance, be aware that, past the age of 65, costs start to become prohibitive.

Return-of-premium rider

A typical long-term care insurance plan is much like any insurance plan. You pay a regular premium for years, and if you don't ever have a need to use it, the money's gone. But plans can have many movable parts, and some offer riders that enable you to get your money back.

Roccy DeFrancesco, founder of The Wealth Preservation Institute in St. Joseph, Mich., suggests that some people may want to consider getting a return-of-premium plan. In these plans, if they aren't used, the premium can be returned to the heirs after a policyholder's death. This approach is most common when the individual owns a small business (C corporation) and can deduct the premiums.

DeFrancesco says, "If you never need long-term care, and you want the money back, you just cash it in." With a return-of-premium rider, the premium's cost is doubled, he says.

Weighing the costs

Most people want to die in their own beds at an advanced age, preferably after an excellent meal and time spent with family and friends. But there are no guarantees, and long-term care insurance is one way to minimize the risk of the cost of care, should the worst-case scenario unfold. However, if you just can't afford long-term care insurance or you, or a loved one, have already been diagnosed with something that will eventually require nursing care, what should you do?

"If you can't afford it," says Rosenberg, "you can't afford it. Then you've got to do something different. I'm a believer in long-term care insurance, but I'm also a believer in putting your affairs in order and having that coordinate with the long-term care."

Those who can't afford it should hire an elder law attorney who can help with Medicaid planning, says Rosenberg. The attorney can also help put all the proper documentation in place, such as a will and medical power of attorney.


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