No one really enjoys thinking about long-term care (LTC). The idea that you may one day be old enough to need it can be rather depressing. The reality is that 60% of people turning 65 in the United States are going to need some form of long-term care before they die. Knowing that, investing in a long-term care insurance policy early can save you a lot of money in the long run.
For a long time, the rule of thumb for long-term care insurance was to purchase a policy when you turn 55. That gives you at least a decade of paying into the policy before you actually need it, which means you’ll have plenty of coverage. However, given the rising costs of a long-term care policy an increasing number of people are purchasing their LTC policies much earlier in their lives.
This makes sense. Like all insurance policies, insurers calculate policy costs based on risk factors. The younger you are, the less likely it is that you are going to experience a medical emergency that calls for long-term care. As a result, your policy is going to be way cheaper. If you can lock those cheap rates in early, you’re going to save a lot of money over your lifetime.
Kent Schmidgall, a CFP and wealth advisor at Buckingham Strategic Wealth spoke with CNBC about long-term care insurance and why he decided to purchase a policy at 27 years old.
“I view insurance as important for protecting against catastrophic risks,” he said. “I felt like I had all of the catastrophic risks, such as premature death, loss of income, the house burning down, liability due to a car accident…taken care of but one glaring risk: At some point, statistically, between my wife and I, we are going to need care.”
It’s important to realize that there are myriad types of long-term care insurance. So much so that you really can tailor the type of policy you are looking for towards what you can afford, and then up the coverage and costs as you become more financially stable later in life.
Of course, one of the biggest reasons people claim to avoid LTC insurance is that they don’t want to pay for something that they might never use. There are a few important responses to that to consider.
First off, you are statistically likely to need that insurance at some point in your life. Second, there’s a hybrid policy available that completely negates that concern. Many insurers are now offering LTC policies that convert to life insurance for your heirs should you never need long-term care during your life. Naturally, a combo policy like that tends to cost a bit more.
If you don’t have the liquid assets to completely fund a medical emergency that requires long-term care, purchasing an LTC policy before you need it could be a literal life saver. Take the time to do your research, compare policies and find one that fits your lifestyle, and your budget.
To learn more about long-term care insurance, we encourage you to reach out to TGS Insurance. The TGS staff are experts in their field and are always willing to work with you to find the right policy for you. Visit www.tgsinsurance.com to learn more.