One of the most important pieces of end-of-life planning for most clients is long-term care insurance. With Americans living longer and health care costs continually rising, long-term care can be a truly scary expense.
According to a study published by Yale University, a modest 5 percent annual increase in health care costs could mean that long-term care could run $400,000 per year 30 years from now. The average length of a long-term care situation is now four years, but there is reason to believe that advances in medicine might extend that for the next generation.
So we could be looking at what for some people might be a million-dollar expense, which is why so many people buy long-term-care insurance. But there is a growing chorus claiming that it’s possible, and even preferable, to self-insure for this expense.
Is it the best option for your clients? Here are some factors to consider:
Not everyone will need long term care. According to a recent article in Forbes, one in three current 65-year-olds will require no complicated care at all before death. Given advances in medicine, it’s possible that the percentages will be even higher for younger people.
The amount set aside for LTC insurance could end up going to one’s heirs, of course. But it’s also possible that the client would be able to use those assets for things other than long-term care during his or her lifetime.