Do you own a home? If your answer is yes, then chances are you also own a homeowners insurance policy. If you have a mortgage, the mortgage company requires you to purchase insurance. Do you own a car? If so, many states require that you own a minimum amount of auto insurance.

Are you over 65? If so, think about this sobering statistic. The chance of you needing long term care this year is roughly ten times greater than your house burning down. And compare these numbers: if your car is totaled in an automobile accident, your loss is probably less than $20,000. But if you require long term care, you have potential losses of $50,000 per year on the average.

Some fortunate few can afford to “self insure” against this potential threat to their nest egg - that is to say, they can earmark several hundred thousand dollars just in case they require in-home or institutional care. But that is not typical of most retirees’ financial abilities. In order to truly shelter assets from the rapid, unexpected expense of long term care costs, most individuals and families should consider obtaining a long-term care insurance plan. If you have adult children, they may be happy to help with the premiums as well. You may be the insured, but your children will receive a great benefit knowing you can receive the best care available if you were to become ill. Most new policies also cover home care - allowing you to receive care at your own home instead of only in a nursing home.

But what if you never need the insurance? Has your money been wasted on premiums? (I hope that I continue to waste money on my life insurance for many, many years to come!)
Will Rogers once said, “I’m not as concerned about the return ON my money, as the return OF my money!” There are some policies that combine life insurance with long-term care benefits so that, if a long term care claim is never paid, your heirs will receive a life insurance benefit at your death. These policies build a tax-deferred cash value that can be used to pay for long term care expenses if you do need care. As with any type of insurance, your health, age, gender, and financial profile will help determine what type of LTC policy is the best fit for you.

Unexpected long term medical costs (NOT covered by Medicare, by the way) are the single biggest threat to most seniors’ nest eggs. If you think that you need LTC insurance, but think you can’t afford it, I recommend talking to an agent who specializes in this type of coverage, and tell them of your concerns before you make any decisions. Policies can be tailor made to fit both your needs for coverage as well as your budget.

Mr. Gary Crooms is President and founder of Senior Information Services of America®, a long term care financial planning firm that specializes in assisting seniors and their families with late life planning issues. If you have any questions, please contact Mr. Crooms at gary@seniorinformation.com