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Financial Alternatives for Long Term Care Insurance

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There are many families that are concerned about what possible illness may do to their finances during their golden years of life. Since the average price of a private room in a nursing home is around $90,000, these families commonly have to turn to long term care insurance to ensure that they will be able to make the payments necessary for their care. However, insurers have been raising the prices and reducing many of the benefits associated with long term care policies. The average premium has gone up around 20 percent in the past year, which has already made long term care coverage less affordable for many people.

Some financial advisors seem to suggest that families should consider taking a different approach to long term care insurance if possible. Their suggestion is to prepare for the associated costs of long term care and completely skip the option of long term care coverage. They claim that not being covered by long term care insurance is not as risky as it seems. Some research has suggested that there is a significant amount of people who will not face a high amount of nursing care costs. In fact, one study has suggested that around one third of people who are retirement-age will never encounter any nursing care costs during their golden years. That same study also suggests that due to the different ways that families can economize their elder care, only around 6 percent of retirees are likely to deal with over $100,000 in long term care insurance costs within their lifetime. Two percent will incur around $250,000 or more.

Families can economize on their long term care based on how they prepare for the care before it is necessary. There are many different options that can be considered. Some options that families may be interested in can include acting as the caregivers themselves to those who are elderly within their family, arranging for at-home care services, and making use of Medicaid if they find that they have depleted their own assets or if it seems as if this may be the only option. Discussing some options with a doctor or a social worker can provide more insights into possibilities that are available and options that may be more suitable depending on the family’s assets and circumstances.

Some people take an interest in self-insuring. This option involves setting aside enough money in savings and investments so that the individual will be able to cover the costs for their care without having to worry about utilizing the day to day cash flow. Another option is to buy life insurance and annuities. Many of these products now include riders that will allow investors to be able to withdraw cash to help pay for their long term care. The advantage to that is that the money that isn’t used for the care can still be used to benefit the policyholders in other ways, such as a death benefit for their heirs or another form of income.