Long Term Care Series – Part 3: Gambling on LTC

In the third part of our series on long-term care (LTC) insurance, Patrick Cloyd shares with us a real-world example of the gamble one takes by not having long-term care insurance.

Here’s Patrick’s article:

Gambling on Long-Term Care:
Study shows many not prepared for likely need

Patrick Cloyd
State Farm® agent

(410) 766-4488

A 48-year-old father of two is left with permanent injuries after an auto accident. A 66-year-old recent retiree suffers a serious stroke. An otherwise healthy 75-year-old grandfather falls and breaks his hip. These people have one thing in common. Quite unexpectedly they’re each likely to need some form of long-term care, through nursing care at home, in a nursing home or at an assisted living facility.

The odds are good that many Americans will find themselves in a similar situation, as estimates by the Health Insurance Association of America indicate that over 70 percent of people over age 65 will need some form of long-term care.(1) But a Roper survey recently released by the American Society on Aging (ASA) and funded by State Farm shows that most Americans are willing to try to beat those odds because so few have done anything to prepare for the high cost of long-term care.

“Long-term care may not be a subject people like to talk about, but it’s something every family should discuss and plan for,” said ASA’s Jim Emerman. “The need for long-term care can arise so suddenly that unless we’re financially prepared, it can rob a family of its assets and its financial future.”

With government data placing the average cost of nursing home care at $56,000 a year(2), failing to plan can be a costly gamble. According to the Roper study, two-thirds of Americans 45 years of age and over say it’s very important they have enough money to be able to choose the setting in which they’ll get long-term care if they need it. But only 37 percent say they’ve been able to put aside money for this purpose and only 17 percent have purchased long-term care insurance specifically designed to cover it. By comparison, nearly nine in ten of the adults surveyed have health insurance and three out of four own a life insurance policy.(3) Why don’t people plan better? Many tend to procrastinate, the Roper study shows. Half of all adults over the age of 45 believe they won’t need long-term care until they’re older and don’t want to think about it now. Others take the long-term care gamble because they mistakenly believe they’re already covered or that the government will pay for it(4).

Americans need to protect themselves and their financial assets by making sure they insulate themselves from the high costs of long-term care. That’s why I urge people to visit a financial services professional to talk about long-term care insurance. It can help protect assets, preserve long-term care choices and help control independence.

Long-term care insurance is one of the most important components of a family’s financial plan.

(1) Lewin Group estimates based on the Brookings-ICF Long-Term Care Financing Model, 1992. As cited in, “Long-Term Care Insurance: Knowing the Risk, Paying the Price.” Health Insurance Association of America (HIAA), 1997: Pg. 12. The level of coverage provided by long-term care insurance depends on the type of policy you purchase. Some types of care received may not be covered by long-term care insurance.

(2) Estimates from: Health Care Financing Administration, Office of the Actuary, National Health Statistics Group. As presented in, “Nursing Homes.” AARP Public Policy Institute Fact Sheet. February 2001: pg. 3.

(3) Study conducted by Roper ASW, August 2002. Released by State Farm Mutual Automobile Insurance Company and the American Society on Agency (ASA), April 2003.

(4) State Farm Mutual Automobile Insurance Company Home Office: Bloomington, Illinois – statefarm.com®.

  • John

    You read so much about how in debt Medicaid, Medicare, and Social Security are. I couldn’t just roll the dice that these agencies would be able to cover long term care for me if I needed it. I had and agent at Insure Your Future call me who took me through the options and sent several quotes to choose from. The coverage is affordable and means I’m relying on the government now.

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