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Should long-term care insurance be a part of my estate plan?

On Behalf of | Sep 19, 2023 | Estate Planning

Unfortunately, many of us wait too long to plan our estates. One consequence of this is that some insurance policies, like life and long-term care insurance, only get more expensive as we age. Indeed, for those who wait too long, long-term care insurance may be too expensive. This makes one ask whether they should add it to other parts of their estate plan.

What is long-term care?

Long-term care refers to the care you will likely need at some point in life when you can no longer care for yourself. Long-term care services include both your non-medical and medical care that you cannot provide for yourself, like bathing, eating, walking, etc. You may need the services of a live-in aid, or to reside in a nursing home or assisted living facility.

Long-term care insurance

Long-term care insurance pays for your long-term care needs, or at least a set amount that can be used for such costs. The costs associated with it are often tied to your age. And, whether you should buy it depends on your long-term goals, financial situation and health.

Do I really need it?

According to the U.S. Department of Health and Human Services, about 70% of Americans 65 and up will require long-term care during their lifetime. Of course, the level of services needed will vary, and while some may only need it for a few weeks, some may need it for years.

What are the costs in California?

According to Genworth’s 2020 Cost of Care Survey, California home health care cost is $64,064 (median), assisted living is $54,000 (median) and nursing home care is $117,804 (median). But, these are only the current costs. These costs grow with inflation and demand, so the longer you are from 65, the higher the cost will likely be.

How do I pay?

You have multiple options to pay: cash, long-term care insurance, life insurance or annuities with chronic illness riders, California’s Medicaid program (Medi-Cal) and veterans’ benefits. Figuring out which ones you qualify for, and which one is best for you takes time, but if you are still young enough that long-term care insurance is affordable, it may be a good option for your estate plan.