# Not Worth the Cost

Bill in Florida has long-term care insurance through his company. The premium is about to increase \$110 a month, and he can either pay it or reduce his inflation rider from 5% to 3.2%. Which is better? Dave runs some numbers for him.

QUESTION: Bill in Florida has long-term care insurance through his company. The premium is about to increase \$110 a month, and he can either pay it or reduce his inflation rider from 5% to 3.2%. Which is better? Dave runs some numbers for him.

ANSWER: A hundred and ten dollars a month—\$1,300 a year, right? The difference in the inflation is 1.5% rider. If a nursing home costs \$50,000 a year, 2% would be \$1,000 a year. That’s your tradeoff—\$1,300 a year for however many years or \$500–1,000 a year for how many years. I’m probably taking that risk and taking the lower premium. Buying long-term care insurance removes the big risk—and I like the inflation rider. It’s a good idea as long as it’s reasonably priced. I don’t think this one is reasonably priced.

In other words, would you spend \$1,300 a year to insure \$1,000 a year? You’re going to pay it for a number of years, and you don’t know how many. You’re going to receive it for a number of years, and you don’t know how many. The question still stands then: Would I pay \$1,300 a year to insure roughly \$1,000 a year? Not a chance.