To Self-Insure or Not

Is self-insuring a wise investment?

Some may believe they can afford to self-insure. But even those with significant assets could erode their savings very quickly should they need long term care.

Just consider the following example. If you save $1,500 per year and obtains a 7% rate of return annually over 30 years, that money grows to just $142,000. But if you were to buy a long term care policy that also costs $1,500 per year the policy benefit maximum could grow to $889,000.14

The truth is that anyone with assets to protect would prefer to leave them to family, friends or a charity instead of an assisted living facility or nursing home.

Saving Premiums to Self-Insure

Hypothetical Premium of $1,895.00
Premium Savings at 8%
31% Tax Bracket		 Age Annual Cost of Care
5% Inflation
$1,895.00 59 $43,800.00
$3,999.00 60 $45,990.00
$6,219.00 61 $48,290.00
$8,562.00 62 $50,704.00
$11,034.00 63 $53,239.00
$13,643.00 64 $55,901.00
$16,396.00 65 $58,696.00
$19,301.00 66 $61,631.00
$22,366.00 67 $64,713.00
$25,600.00 68 $67,949.00
$29,013.00 69 $71,346.00
$32,614.00 70 $74,913.00
$36,414.00 71 $78,659.00
$40,424.00 72 $82,592.00
$44,655.00 73 $86,722.00
$49,120.00 74 $91,058.00
$53,831.00 75 $95,611.00
$58,802.00 76 $100,392.00
$64,047.00 77 $105,412.00
$69,582.00 78 $110,683.00
$75,423.00 79 $116,217.00
$81,586.00 80 $122,028.00
 
After 22 years of saving, you have accumulated approximately enough money to pay for 8 months of care.
If you were faced with the average 3.1 Year Long Term Care stay, even under the optimal saving conditions shown above, you would have $309,110.90 of exposure.

Every year in addition to the average 3.1 Year Stay will cost you an additional $128,129.00/Per Year.
 




Most long term care funds come from life savings or retirement savings.

Asset (Savings, CDs etc), Income Protection Method
home homeowner's insurance
car car insurance
family life and health insurance
wealth life insurance
income disability insurance
all above health insurance
retirement assets, retirement income what protects this?

Can you think of anything other than the cost of long term care that could deplete your lifetime savings, retirement income, or portfolio?

If you needed long term care tomorrow, what would be the consequences to those around you?

It's the consequences that matter, not the money. Once someone needs care money no longer becomes an issue. Once someone needs care no amount of money can buy insurance. Their decision to self-insure will prove to be right or wrong.

Would it have been a mistake to insure for Long Term Care?
1. You Insure for LTC You Need LTC No Mistake
2. You Don't Insure for LTC You Don't Need LTC No Mistake
3. You Insure for LTC You Don't Need LTC Yes Mistake
4. You Don't Insure for LTC You Need LTC Yes Mistake

Which mistake would you rather make?


Some People Hate Insurance

For those who cannot sleep at night knowing that they may die before they use their long term care insurance there are alternatives to no cash-value long term care insurance.

One alternative is a universal life insurance policy with a long term care rider, this is great for those who already have a whole life policy, they do a 1035 tax-free exchange to a universal live policy that has LTC benefits. Get a quote.

Another alternative to insurance especially if you are either uninsurable or have been turned down, is an annuity with long term care benefits and the best part is there is no underwriting. Get more information here Annuity With LTC or get a quote.


Also see
LTC CHARTS



Top of Page