Lack of Long Term Care Insurance Leaves Women Vulnerable (Part 2)

Lack of Long Term Care Insurance Leaves Women Vulnerable (Part 2)

If you’re a woman, chances are you’ll require some long-term financial support when it comes to your healthcare needs. A recent report conducted by the American Council of Life Insurers finds that women are at a higher risk of needing long term care insurance. The report, entitled Who Will Pay for Our Long Term Care? says women are more likely to be widowed and to live alone compared to men. They are also likely to be the sole caregivers for elderly spouses and other family members. Andrew Melnyk, chief economist and vice president of research at the ACLI, sat down with to shed light on this issue. Here’s the second half of that interview. When is the best time to purchase LTC insurance?

Andrew Melnyk: Typically, the younger you are, the lower your premiums will be. In our study, we found that the average age of a long-term care insurance purchaser in the individual market decreased from 68 in 1990 to 59 in 2010 (Source: AHIP 2013). Where can consumers go to purchase LTC insurance?

Melnyk: Long-term care insurance is sold to individuals through an agent or financial advisor. It also may be available through a group plan offered by an employer. Employees covered under qualified group plans can continue their coverage when they leave their employer, as long as they continue to pay the premium. ACLI’s consumer brochure “Long-Term Care Insurance: Protection for Your Future” answers commonly asked questions about long-term care insurance and provides a checklist for selecting a policy. Are there any price-comparison tools available?

Melnyk: It is difficult to develop a reliable price-comparison tool for long-term care insurance premiums because, as stated above, the cost of premiums will depend on a variety of factors. However, the American Association for Long-Term Care Insurance’s website provides some guidance to help consumers compare the cost of coverage. Is there anything else you’d like to add?

Melnyk: The high and rising cost of long-term care can quickly deplete retirement savings. As people make financial plans for their retirements, it’s important they consider how they would pay for these costs. Since 2005, the cost of nursing home care has grown by 4.5 % annually, compared to an overall inflation rate of 2.5 %. If this trend were to continue, the average cost of a one year stay in a nursing home will increase from about $81,000 per year in 2014 to $146,000 in 2030.

Other long-term care services may cost less but are still expensive. Non-certified home health aides typically charge $20 per hour; the average base rate for the services of an assisted living facility is $42,000; and one year of adult daycare services is $16,900. Long-term care insurance can help pay for these costs and protect hard-earned retirement savings. Long-term care insurance—like other forms of insurance—helps provide financial peace of mind. It helps people maintain their dignity and independence at a very vulnerable time in life.