One of the most expensive aspects of old age is long term care which can easily reach $80,000 or more per year. For many years, long term care insurance was an option that grew in popularity since it offered the promise of protection from estate destroying cost in exchange for years worth of premiums. But they industry soon found itself in trouble as the cost of care proved more expensive than the actuarial tables of the time predicted which eventually forced many players out of the industry and drove up premiums steadily to the point that current ones are nearly five times more expensive than in 2007. In addition, retirees who bought the plans eventually realized that the premiums must be constantly paid or the policy will lapse without any equity built up from the years of payments even if the plan was never used. These days, long term care insurance can still be a viable option for some but many estates will be better served by pursuing hybrid plans that include a long term care as an element of an annuity or life insurance although those plans are not without their own unique hassles. Ultimately, the best step is to consult with an estate planner to review the options that are available when it comes to financing extended care without wrecking an estate that would preferably be passed on to the following generations.
See John F. Wasik, Long-Term Care Insurance Can Baffle, With Complex Policies and Costs, The New York Times, December 18, 2015.
Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.
