Most of the families who purchase Long Term Care insurance are families that have firsthand experience with a family member. Once you have helped a parent or grandparent move into a facility, and gone through the process of paying for the services you quickly realize how expensive it can be.
The chart below was taken from a calculator provided by Genworth Life Insurance Company and shows the costs for each type of care in Los Angeles for 2018. One thing to notice is the 2038 projected costs for each type of service is based on a 3% annual inflation, which is actually less than the projected LTC service inflation rate.
So what does this all mean?
Well, first of all it means that the last few years of a person’s life can be very costly. Since there is about a 70% chance of a person needing some type of LTC service over the age of 65 it’s very necessary to plan for such an event. Whether you can afford to self-insure or not, a quality LTC policy can be beneficial for any estate.
Many people believe that our healthcare system will help them pay for these services, but that is only true for a small amount of circumstances, for a limited amount of time, and will only apply to approved facilities and care. For instance, Medicaid/MediCal will only pay for LTC costs if the individual has under $2,000 in total assets.
Discuss with your financial advisor the options you have to pay for Long Term Care.