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Do you need long term care insurance? 3 myths about LTC insurance

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The latest report on who will need long term care is out and the results are sobering: Chances are about 70% that those over 65 will need some type of long term care according to the Life and Health Foundation for Education.

The cost for my father-in-law to pay for in-home care in Orange County, California is $70,000 per year. This is 12 hours per day, 7 days a week for his wife suffering from Alzheimer's. He has been paying that for the last 3 years and he was fortunately able to refinance his home to continue to be able to care for his wife for another few years.

However, many others are not able to afford the high cost of care in their 80's or beyond.

The median cost of a full-time nursing home room is $81,030 according to the Genworth 2012 Cost of Care Survey. For those of us living in the San Francisco Bay Area, the cost is even higher.

Few of us budget for these kinds of expenses, yet if you knew there was a 70% chance your next flight might not make it, would you do something about it?

By the way - not everyone needs long term care insurance. People like Warren Buffett and Suze Orman are wealthy enough that they can "self-insure" if there is a long term care event. Also, the very poor (less than $2,000 in assets for the most part) will be eligible for a Medicaid bed in a state nursing home (in California, MediCal funds this benefit.)

But what about the rest of us? Let's look at 3 convenient myths that delude us into thinking we won't need a plan.

Myth # 1: My spouse will take care of me.

I hear this mainly from the men - he knows he will most likely die before his wife (we do live longer in general) and that she will take care of him. The facts are also that men are usually much heavier and larger than women and to be able to lift 180 pounds of dead weight from the floor to a bed or couch is difficult, if not impossible, for most women. It is also difficult for most men!

The inconvenient truths are that a cognitive impairment like dementia or Alzheimers can require 24/7 care or that many care givers develop their own health issues due to the added stress of providing care and they are unable to continue to provide that care. Also, I find that women often wonder, "when he's gone, who will take care of me?"

Myth # 2: My health insurance or Medicare will take care of me.

The fact is that health insurance -- including Medicare -- pays for hospital and doctor bills but not for custodial care when you have a long-term disability or illness. Custodial care includes help with such daily tasks as eating, getting out of bed, toileting, bathing and remembering to take medications.

Myth # 3: I don't need to apply until I'm in my 60s.

I hear lots of people brush it off as not necessary until they retire. The reality is that insurance premiums increase with age and health problems. Someone in their early 50s who is healthy will see greatly reduced premiums than someone in the same health in their 60s. Also, most of us start to experience health issues in our 50s - things like high blood pressure, diabetes and other ailments that can dramatically raise the premiums for insurance. In many cases, we are one checkup away from being declined for an ailment that makes us uninsurable.

I recommend people look into LTC insurance when they are in their 50s.

There are many reasons people don't buy this important coverage, but the financial depletion of hard earned retirement savings is only one part of the problem. The more important problem is what a long term care event does to a family. Often a family member - usually female - gives up her career, family and life to care for a parent or loved one. The result on the remaining members is strained and often causes families to break apart. The tragedy is then compounded. The better solution is to have the funds from an insurance policy to provide for care while the family members can spend time with the patient, not fighting over who will pay or care for her.

Check with your insurance professional to learn more about long term care insurance. Even Suze Orman recommends everyone who can afford it, get it.

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