Long Term Care Insurance

If you are very rich you can afford to hire a care giver or live in an assisted living facility or nursing home.  If you are not rich your family will have to struggle with the reality of giving you care.

I enrolled in a Personal Finance class at my local community college (Pierce College, Woodland Hills, CA).  The description said, “learn the basics of investment strategies, The new Medicare RX plan, Long Term Care Insurance, financial planning, the law, as well as techniques to minimize taxes, and how to create an income in retirement.”  It turned out that two of the six classes I attended were sales pitches.  The other four provided very little in the way of new information or ideas.

One session was presented by a man who claimed to be a financial adviser.  His real purpose was to enroll class members with his firm that manages your savings.  The cost is just 1% of the value of your investments per year.  He would not consider anyone with less than $250K as a client.  So that is a mere $2,500 per year for the least eligible client.

Another session, my last, was a series of scare tactics to enroll with the presenter for long term care insurance.  This presentation was made by a woman who wore dark sun glasses during the entire presentation.  I felt like I was at one of those presentations at a local restaurant that includes a free lunch.  She cautioned the class to disregard Consumers Reports evaluations of this insurance.  After questioning her about the soundness of the insurance companies offering these policies, and being asked to be quiet by the class instructor, I left the room.  Reaching my house I, of course, immediately went to the Consumers Reports website.

Here is what I found on the CR website.

Sales pitches and their catches

To sell you on long-term-care insurance, agents may play fast and loose with the facts. These pitches are drawn from an insurance-industry publication and interviews with agents.

The pitch: You need to buy long-term-care insurance when you are young. More than 40 percent of people who need long-term care are under age 65.

The catch: Only 159,000 of the 238 million people under age 65, or less than 1 percent, receive nursing-home care.

The pitch: There is nearly a 50 percent chance that a person will require 24-hour care in a skilled-nursing facility.

The catch: One percent of those ages 65 to 74 live in a nursing home, 4 percent of 75- to 84-year-olds, and 19 percent of those age 85 and older.

The pitch: If you are over age 65, you don’t need inflation protection.

The catch: According to the most recently published figures, the average age of admission to a nursing home is 83, and costs are expected to rise more than 5 percent a year. At age 65, you face 18 more years of inflation.

The pitch: You’ll get into a better nursing home if you have insurance.

The catch: While some nursing homes may prefer to take residents who do not have to rely on Medicaid, there is no guarantee that those homes provide better care. To check on any nursing facility you are considering, visit the ConsumersUnionCenter for Consumer Health Choices Web site at www.consumersunion.org/health/nursing-rpt603.htm.