Is Self-Insuring for Long Term Care the Way to Go?
Published On: November 11, 2013
Last Updated: September 2, 2023
People tend to avoid discussing subjects like disability, old age, and long term care as much as possible. Sometimes, even to a point of detriment. Brushing off the need for long term care coverage for the alternative plan of self-insuring is one situation that is often the result of failing to confront the true risk.
Discuss Your Options
Aging brings about a higher chance of needing long term care, which is care for someone who is unable to perform daily tasks on their own. Sometimes this is due to dementia or a chronic disease, while other times it is a temporary arrangement due to an illness or an injury.
Planning for long term care isn’t a last minute, split second decision. A good amount of time should be spent thinking about your personal risk of needing care, the current state of your portfolio, and your familial dynamic. Sitting down with family is one of the first steps that should be taken in the process of planning for long term care.
If you are married, you must discuss the possibility with them and decide how you want to prepare. Women, especially single women, are more likely to need care. Studies have also shown that despite this, women are less prepared financially for retirement than men.
The reason it’s so important to plan ahead for long term care is the high cost. The price of even just a few years of long term care, never mind all the other retirement health expenses, is enough to essentially erase your retirement portfolio and drastically change your lifestyle.
According to Genworth’s 2013 Cost of Care Survey, the median annual cost of a home health aide is $44,479. A year in a nursing home costs nearly double that at an estimated $83,950. The majority of people who plan to self-insure don’t have nearly enough to cover these kinds of costs without making huge alterations to their daily lives.
Unless you have a nest egg of a few million dollars to spare, self-insuring for long term care leaves you open to the risk of spending through your money and being forced onto Medicaid. Even then, with the cost of long term care rising every year, it’s hard to know just how high health care expenses will be 20 or 30 years down the road.
Be Financially Ready
If you happen to need care during a time when the market is bad and your portfolio is suffering, you might be left unable to afford care or find yourself financially vulnerable afterwards. If you are unable to care for yourself for any reason, you want to be sure you receive quality care and aren’t worried about how to pay for care.
Rather than self-insure, taking out a long term care insurance policy can help protect your assets and give you peace of mind that you will be cared for should anything happen. As with any insurance, there is always the chance that you won’t need care, but long term care insurance helps ensure you aren’t taking a massive financial gamble and risking your hard earned nest egg. Read more about long term care insurance or fill out this form and receive a personalized quote of the top long term care providers.
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