Is Long-term Insurance the way to go?

The Facts: I am in my late fifties and am thinking about purchasing a long term care insurance policy.

The Questions:  What are some of the factors I should consider before I purchase a policy?

The Answer: Long term care insurance can be very confusing and may not be the best option for some people. Although about 50% of people who reach the age of 65 will likely need long term care during their lifetime, the best way to pay for that care depends on a number of factors, not the least of which is the size of your nest egg and how much of your savings are being used for your current living expenses. If you are not living off your savings, and those savings are significant, you may opt to private pay for your care if/when it is needed. If that is the route you decide to take, it would be wise to segregate the money you may need for long term care from the funds you use for your daily living expenses. That way if you are admitted to a nursing home, the funds will be available to cover the cost of your care.

If you do not have significant savings or the income needed to cover the cost of long term care, you may be eligible for Medicaid benefits. However, Medicaid is only available to those who can establish that they are “impoverished”. While Medicaid planning strategies may increase your chances of being eligible for government benefits, if you have made gifts or otherwise disposed of your assets through “uncompensated transfers”, you will likely be required to pay for your own care for a period of time before you become eligible. If your purchase long term care insurance, the benefits paid by the insurer could pay for your care during the penalty period. If you are still institutionalized at the end of your benefit period, Medicaid may pick up the tab.

If you do not feel comfortable with the idea of private paying what could very well be in excess of $450 a day for your care, and do not believe you will be eligible for Medicaid, long term care insurance may be an option for you. However, insurance is not cheap. Policies can run as much as $3,000 or more per year. The older you are when you buy a policy, the higher the premium. That being said, if you can afford the coverage, it may be the best way to go.

When shopping for a policy, look at the daily benefit amount, the period for which benefits will be paid, the waiting period between when you file a claim and when benefits will begin and the type of coverage that is provided (home care, institutional care, care provided by family members, etc.). Since the cost of care is likely going to increase, you should buy a policy with an inflation rider.

If you do not want to purchase a traditional long term care policy, you can look into hybrid policies that combine life insurance with long term care coverage. Unlike traditional policies that only pay benefits if you need long term care, hybrid policies guarantee a death benefit regardless of whether you are institutionalized. In some cases it is easier to qualify for a hybrid policy than a traditional long term care policy. However, you will pay more for a hybrid policy because of the flexibility it provides.

When shopping for long term care insurance, you should talk to an independent insurance agent who sells policies from more than one insurer. You should also discuss your options with an experienced estate planning attorney who can advise you as to whether long term care insurance is the best option for you based upon your overall estate plan.

This article first appeared the Times Beacon Newspapers in August, 2018.

Linda M. Toga provides personalized service and peace of mind to her clients in the areas of estate planning, wills and trusts, Medicaid planning, marital agreements, estate administration, small business services, real estate and litigation. Visit her website at or call 631-444-5605 to schedule a free consultation.