If you are a young person or couple, why would you even think about an insurance policy that covers long-term care expenses that might kick in – at what? – age 80? It’s not about you. It’s about your parents, and the impact they may have on you.
Consider these facts. Best estimates are that more than one-third of those over 65 today will need long-term care. The need today, on average, starts in the early eighties, but often much earlier. The length of care, on average, is just short of three years for non-Alzheimer’s patients and nearly three times that (over eight years) for those suffering from Alzheimer’s. The average cost of nursing care today is about $6,500 a month – right around $77,000 a year. In some parts of the country, the monthly price tag for a quality home now tops $12,000.
All these numbers are expected to escalate greatly as the massive group of baby boomers move into to their ever-lengthening twilight years. Simple arithmetic confirms that the prices will likely triple in the next twenty years. The first baby boomer turned 65 in 2011. Within 10 years, by 2021, over 20 percent of our nation’s adult population will be over the age of 65.
Suppose you have parents who are at or near the 60-year mark. When their need for nursing care hits twenty years out, the monthly price tag will likely be in the $15,000 to $35,000 range. And the time for needed care will have lengthened because our medical experts keep finding ways to keep the elderly alive.
If your parents don’t have sufficient resources squirreled away to cover such a huge hit (most don’t), the burden likely will fall squarely on you and your siblings. And the monthly bills may start arriving at a time when your other financial responsibilities – college education of kids, saving for your own retirement – have peaked.
Just take a hard look at those in your midst who are now struggling to deal with sick, elderly loved-ones. Watch how lifetime nest eggs once targeted for future generations disappear like clockwork. Witness family members struggle with gut-wrenching, quality-of-life compromises, all driven by money. Then imagine the impact of the boomers.
The responsible answer for many boomers north of fifty is a long-term health care policy that will cover the cost of their needs down the road and save their children from the burden. If your family is one of the lucky few with sufficient financial resources to comfortably cover any future hit, it’s just an investment analysis. For all others, the issue is: How else are we going to do it?
Long-term care policies are not cheap. Premiums have ballooned in recent years as insurance companies have come to grips with their future exposures. It pays to work with a quality professional who knows the market, the risks, and how to do it right. The cost of a good police may be as high as $250 to $400 a month, or possibly more, depending on the age it starts. And for most, the premiums will be shelled out for many years, probably decades, before any benefits are paid. But if and when the need arises, the policy may be a godsend for the entire family.
So if you’re a young person or couple, you may have a strong, personal financial interest in an LTC policy that covers your parents. You may even consider pushing them a little to cut back on that next RV and start funding a program that protects the whole clan.