Who Is The Typical Long Term Care Insurance Policyholder?

There is certainly a need for long term care insurance in today’s society. As Americans live longer with the advent of new technologies and medications, they are seeking alternatives to the type of long term care that was available in year’s past – and a way to pay for it.

We asked Bob Scott, a partner with the Advocate Law Group to share his thoughts on who he thinks is the typical long term care policyholder and who really needs this kind of insurance. According to Scott, “I think the need for a long term care policy really depends on one’s individual family situation, on one’s own financial situation, one’s health situation and one’s comfort level.”

Can you afford it?

Purchasing long term care insurance can be very expensive depending upon your financial situation, your health and you’re the type of policy you get. One question that Scott thinks consumers should ask is, ‘Can you afford it?’ “I’ve seen long term care insurance being purchased by very wealthy people who have a lot of extra money. They say that if they need long term care, they don’t want the cost of it to come out of their estate. They want the cost to be born by the insurance company.

That always strikes me as a rather foolish reason to purchase insurance. If you don’t need it, why are you buying it? If you have significant resources that will continue, should you become unable to fully take care of yourself, is there really any sense to buying long term care insurance?

On the other hand, does it make sense to impoverish yourself today by paying premiums you can’t afford? It will make a real dent in your lifestyle to guard against the possibility that you may have a disability down the road and get some money for it then – assuming the insurance company does pay the policy benefits as it’s promised to do.”

Specific examples

We asked Scott if there were specific individuals that he thinks should or should not purchase long term care insurance. He responded, “Yes. I would recommend it to a person who lives far from his or her family, is financially comfortable and can afford the premium. That would be somebody that makes sense.

In addition, if you have a distant parent who is struggling to make ends meet, you may want to purchase it for them so that the financial burden won’t fall on you and you will essentially trade off the possibility of a significant expense down the road for a small and affordable premium now. Children may want to chip in and buy a long term care policy to both assuage their possible guilt and to pre-fund a parent’s possible need for long term care.”