Why You Need Long-Term Care Insurance

Here are some thoughts from the wonderful book The Bogleheads' Guide to Investing (I LOVED the book -- see my rating for details) on way people need long-term care insurance:

Five out of 1,000 people will experience a house fire: average cost, $3,400. Seventy out of 1,000 people will have an auto accident: average cost, $3,000. Six hundred out of 1,000 people will require a nursing home stay: average cost, $50,000 per year, with an average stay of three to five years.

Sounds like there are some pretty good facts on why we all (eventually) need long-term care insurance, huh? It's more likely that we'll need it and it's very, very expensive if we don't. Kind of reminds me of disability insurance as it also is more likely than other forms of insurance to be used and can be costly if you don't have it.

For more thoughts on long-term care insurance, see Why You Need Long-Term Care Insurance and Six Steps to Buying a Long-Term Care Insurance Policy.

For more tips on getting and saving on insurance, see Best of Free Money Finance: Insurance Posts.

Comments

[Russell Bailyn]

Those are interesting stats. After fielding questions about long-term care insurance enough times, I've come to an interesting realization: rich people don't need long-term care. If you have over a million dollar liquid, it's unlikely the insurance will prevail in a cost-benefit analysis. Similarly, households with $60,000 or less can't really afford the insurance and it can be psychologically taxing to try to pay for it. Long-term care falls directly on the middle class (like many other things) and is certainly an understated reality.

[Bill]

My thoughts as well, Russel. My money invested is likely to return enough to cover long term care if I need it. If I don't need to use it, it can go to my heirs. The risk is needing long term care at a much younger age than typical.