Why Buy Long Term Care Insurance?

You and I both know you should have it.  What stops most people are the following concerns:

1. If I never use it, all that premium money will have been wasted.  To answer that concern, insurance companies developed hybrid life/long term care policies that  make sure your family gets your premium back and then some.  Whether you die first, get long term care first, or use both benefits, you will receive the pool of money you purchased. What does that mean?  Let’s say Teresa can spend $2500 a year for long term care/life insurance and she is in her early 60s and healthy.  She will create a pool of about $100-110K that she and her family will ultimately receive, regardless of the sequence of death and long term care.  For example, if she uses $60,000 on care before her death, the remaining, unused amount goes to her beneficiaries as a tax-free death benefit.
2. Another common concern is  “I don’t want to go to a rest home, no matter who pays.” A comprehensive life/long term care policy will pay out benefits for someone to receive home health care, which can keep you out of a rest home.  A major benefit of having long term care insurance is that it gives you options to choose where you go, in case you do need to go to a rest home one day.  To have the government pay for it, you have to first impoverish yourself to their guideline.  Then, they choose where you go, and very often it’s not in your own community.  I’ve seen cases where the nearest available bed was 100 miles away, that is where the person was sent! 
3. Concern #3 is, “What if I can’t afford the premiums, or I have pre-existing conditions?” You can purchase Home Health Care coverage by the hour.  $95 a month gets you 1500 hours of home health care.  That cost of $95 applies regardless of your age, gender or pre-existing conditions.  The only question on the application is “Are you now receiving Home Health Care from anyone?”  You must be able to say no at the time you purchase the Home Health Care policy.
4. Concern #4.  “It’s really really expensive.” First of all, if combined with life insurance, it really isn’t. Your investment (and more) will come back to your family at some point.  Secondly, consider this: if you are currently paying for life insurance and it has cash value, you can do what is known as a 1035 Exchange, which transfers all that cash value, tax-free, to a new hybrid long term care/life policy.  That means money you were already paying out for life insurance is now doing double-duty, as is the cash value. You can use it to lower your premium, or you can choose to contribute more money in order to accumulate money as a retirement supplement.