Long-term care insurance is often overlooked as “unnecessary” or “superfluous” insurance coverage. Most adults assume they will live a long and healthy life and will live in their home without additional help forever. Considering the possibility of an assisted living, retirement facility, or in-home health care is incompressible to many aging adults.
These myths can cause financial devastation to the individual and to their family and friends who are often left with the burden of expensive caretaking responsibilities. The Insurance Information Institute debunks many of the common Long-term care (LTC) insurance myths posed by consumers.
Myth #1: I won’t need help and I don’t want help anyway.
According to the U.S. Department of Health and Human Services (HHS), about 70 percent of individuals over age 65 will require at least some type of long-term care services. There were 43 million people age 65 and older in 2012, accounting for 13.7 percent of the U.S. population, or about one in every seven Americans, according to the U.S. Census Bureau.
Myth #2: Long term care insurance isn’t worth it because it doesn’t cover the care I need.
LTC pays for services to help individuals who are unable to perform certain activities of daily living without assistance. This could be due to physical impairment, injury, or other health concerns. In addition, LTC assists those who require supervision due to a cognitive impairment such as Alzheimer’s disease.
Myth #3: It’s too expensive.
Nearly 5 million people were covered by long-term care insurance in 2012, according to a study by LIMRA International. The average first-year premium for individual LTC coverage purchased in 2012 was $2,493, approximately $200 per month.
Myth #4: I’m not retired yet, I don’t need it.
In 2012, 69 percent of new long-term care insurance policies were purchased by individuals under the age of 55, according to a study by the American Association for Long-Term Care Insurance. The average age when people applied for coverage was 56 years.
Myth #5: I have other investments to cover my care needs
The monthly costs of nursing home care, accounting for inflation over time, could be nearly $30,000 per month in 30 years. Even if you manage to save $120,000, that money will be gone in less than 6 months.