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Considering long-term care insurance?

The expenses of round-the-clock nursing home care are exorbitant. Even mid-tier facilities in the Denver area with semi-private rooms can cost between $9,000 and $10,000 per month. According to a study by Genworth Financial, private rooms in high-end nursing homes in the huge Denver-Aurora-Lakewood metropolitan area can cost upwards of $230,000 annually.

These staggering costs can easily run through a lifetime's worth of saving and "pinching pennies" to provide a comfortable retirement. In just a few years, expenses can easily top $500,000 or even $1 million. You may be able to structure your estate in such a way to maintain eligibility for government benefits through Medicaid or Social Security, but that isn't always possible.

With that in mind, the cottage industry of long-term care (LTC) insurance has boomed in recent years. This sort of coverage has been available for over 25 years, but the rapid rise in costs associated with nursing home care translates to a higher interest in them now.

Whether or not an LTC coverage policy is right for you depends on several factors. We'll examine them now.

  • Your financial status: If you have a relatively low-level estate (you don't own a home and have less than $250,000 in other assets), the cost of LTC premiums alone could be a reason to forego coverage. LTC policies cost hundreds of dollars per month per person, though they are more affordable if purchased when the policyholder is younger and in relatively good health.
  • When you'd need LTC benefits: The American Association for Long-Term Care Insurance suggests that most people purchase LTC coverage between the ages of 52 and 64. Typically, age-related health conditions have not fully manifested by this time, so coverage is still available for a relatively reasonable cost. For people with a family history of chronic or terminal illnesses (like Alzheimer's, dementia, certain cancers, etc.), coverage should be considered at a younger age, but oftentimes, many insurers don't cater to clientele younger than 40 for these sorts of policies. Premiums increase exponentially as the policyholder ages.
  • The level of assistance you anticipate: An estimated 70 percent of people over the age of 65 will need long-term care (defined as needing assistance with basic life functions, including personal grooming, bathing, cooking, feeding, managing medications, etc.) at some point. The average assisted-living facility stay resulting in discharge - which includes patients who were there for rehabilitation following an injury, illness or major surgery - lasts 270 days. Even a shorter stay like this one can easily cost $100,000. Nursing home patients with terminal illnesses or serious disabilities can linger, with life support and assistive nutrition/hydration, for years.

Particularly if you have a valuable estate, the decision to purchase long-term care insurance can make a huge difference in the amount of assets you are able to pass on to your heirs. Before you decide, weigh your various life-care planning options with an experienced estate attorney.

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