A typical nursing home can cost anywhere from $50,000 to $70,000 per year.  If an individual becomes unable to take care of themselves and lives for 30 years, that can be a $2,000,000 burden placed on the family.  If the family is unable to pay this amount, than more often than not, the disabled family member is forced to move into the home of their family and the family is burdened with feeding, dressing and bathing their love one.

My parents and teachers never taught me about long term care insurance.  Not having long term care insurance places a huge burden on my family.  To me, I’d rather be able to pay somebody to change my soiled sheets than place that burden on my love ones.  Not having long term care insurance means I will have to stop living freely during retirement.  I will have to hoard money just incase something happens to me and I need to pay somebody to take care of me. 

Owning long term care insurance changes all that.

People can usually justifying paying for long term life insurance which can cost $5000 a year.  Unfortunately, people have a difficult time rationalizing long term care insurance.  What people don’t understand is that they will pay much more later if they don’t pay a little now. 

We are surrounded by thousands of elderly people who have to stop living to protect a small amount of money just in case they have to go into a nursing home. 

Example:

Say a person has $500,000 saved and they are living off of it during their retirement.  They draw a line on an amount they can spend of the $500,000, just in case they need to go to a nursing home.  The line seems to be drawn around $250,000 which is about 5 years of nursing home living.  These people will stop living to make sure that they have this safety net of that original $500,000.  They live with old stained carpet verses getting new carpet.  They keep that old broken down couch rather than replacing it.  They stop living and start hoarding pennies just to make sure they don’t spend that $250,000.  This far too often scenario means that the $250,000 is already spent.  Now say that at the age of 50, this person would have purchased long term care insurance.  The cost typically would be around $5000 a year.  If the person lives for 30 years, their $5000 per year means they would have spent $150,000 verses the hoarding $250,000.  Another interesting point is that the $250,000 that they were protecting could return 3% a year in a low risk investment.  A 3% return would mean they would generate $7,500 in interest a year.  The interest would pay for the insurance while leaving an extra $2,500 to spend.  They would be able to replace that couch or carpet.  If they invest the $250,000 they can do things and have a life verse carefully watching every penny. 

So how do you determine when to purchase long term care insurance and how much?  The best way is to contact an insurance agent and have them quote you the cost.  Ask what the difference would be in the premium if you were between the ages of 50 to 55 as of today.  Then look at the delta in premium from the 50ish age and your age today.  Multiple the difference by the number of years until you are 50ish.  The true calculation would also compound the delta per year but this quick and simple method lets you begin to visualize when you should consider purchasing long term care insurance.