Long Term Care...to Insure or Not to Insure?

Long term care insurance is an issue that is coming up for my clients with more and more frequency as the population in general pays more attention to financial issues and the health of the national economy.  It's smart to consider this type of insurance since the average monthly cost of a nursing home in Connecticut is, officially, $9,464.  But remember that's the average, so half of the nursing homes have costs which are higher than that figure, with some being substantially higher.  This means that there's a very good chance that a long-term nursing home placement would be the most costly event in one's life.

In general, I would say that shopping around pays off due to the wide disparity in premium prices from company to company, and shop around while you're still relatively young since the premiums obviously increase with age.  I would also say that if paying the premium would have an impact on your standard of living then the cost is probably too prohibitive and you'll just have to hope for the best.  Remember that the statistics say there's roughly a 50/50 chance that you'll need a nursing home stay at some point.

The "back-up plan" would be Medicaid planning which is much less appealing than having long term care insurance coverage.

I would also ask your agent to discuss the CT "Partnership" Program which could allow you to keep substantially more assets than you normally could if you ever apply for Medicaid benefits.  Under the Medicaid program a single person can only keep $1,600 in assets.  But if the applicant has a $100,000 Partnership long term care insurance policy then the asset limit for Medicaid jumps to $101,600.  This would allow you to pass a legacy onto your beneficiaries...a luxury that most Medicaid recipients do not have.

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