Sometimes when you are trying to be financially responsible you have to think about other people’s finances.
For my younger readers, think about your parents. What if Dad reached the unfortunate medical situation where he couldn’t take care of himself? Does he have the money to put himself in a home or pay for a caretaker? Do you want to drop everything in your life and start taking care of him? Do you want to foot the bill for his care?
You might consider nipping this problem in the bud early by talking to your parents about Long Term Care Insurance.
Long Term Care Insurance (LTCi) is a little complicated, but it basically provides payment for the care of anyone who cannot take care of himself. Different companies have different policies so you’ll have to do your own research, but it could be worth it.
Should My Family Get LTCi?
It’s hard to tell if you or someone in your family needs long term care insurance, but personal finance journalist Chris Farrell gives a helpful rule of thumb his article about LTCi:
A rule-of-thumb is purchasing a long-term care policy isn’t worth it for those with relatively few assets, say, less than $250,000. Odds are they’ll eventually turn to Medicaid if necessary. People with more than $2 million in assets have the financial means to self-insure. But rules of thumb are only a starting place for research. Look at your full financial picture — assets, income, and expenses.
That is a very broad, general rule so it’s important to know that it takes more research to figure out if you need LTCi for your family or not.
Get In Early for Low Premiums
The key to getting affordable premiums for LTCi is to start the policy when the insured person is in relatively good health and isn’t too old (late 50s or early 60s). If your dad is 80 years old today there’s a good chance the insurance would be so expensive that it wouldn’t be worth it.
The key to keeping your premiums low is to get in early and then make sure to stay enrolled in the plan. Just keep paying those premiums and eventually it will probably pay off.
Do The Research and Make the Right Decision
No one likes paying insurance premiums, but paying a bunch of money for your parents to receive care instead of saving for your own family and retirement is even worse. LTCi will be right for some people but not for others.
Readers: Have you ever considered LTCi? Do you have a policy for you or a family member? Why or why not?