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Ask Dave

When Is Long-Term Care Insurance Necessary?

Byron asks Dave to explain long-term care insurance and if it's needed. Dave is happy to break it down.

QUESTION: Byron asks Dave to explain long-term care insurance and if it’s needed. Dave is happy to break it down.

ANSWER: Long-term care insurance is basically nursing home insurance. It pays the nursing home bill if you are admitted to a nursing home. It is needed if you are 60 years old or older. I recommend on your 60th birthday that you buy long-term care insurance and not a day before, and really, not a day after. I don’t want you being 65 and 75 and your health fails and you’re unable to get the insurance.

Long-term care insurance is very needed for people in their 60s, 70s, and 80s. Here’s why. A nursing home will cost you $30,000–50,000 a year. Three years of that is $100,000–150,000. That’s pretty rowdy. That’s real, though. And 75% of you ladies will outlive your husbands. The typical scenario statistically is Grandpa gets sick, goes in a nursing home, stays two or three years, and cracks and scrambles the nest egg—uses up all the savings. He dies, and Grandma is left with no money because it was all used for Grandpa’s nursing home bill. She lives another 10 or 15 years, struggling the whole time, when she would have been just fine without the nursing home bill.

If you’re 60 years old or older, you should buy nursing home insurance—long-term care insurance. If you are less than 60 years old, you have less than a 1% chance of spending time in a nursing home. I do not insure through things like that. I would not recommend you buy long-term care insurance before 60 because statistically you’re simply not going to use it. After 60, I strongly recommend it. If your parents are that age, I recommend you have the talk with them.

Long-term care insurance is just like other kinds of insurance. The best way to do it, the best way to buy it, is to go to an insurance broker that will shop among several different insurance companies to find you the best price in your particular location, situation, age, health, everything considered. I’m a big proponent of long-term care insurance once you’re 60.