Benefits and Drawbacks of Long-Term Health Insurance

Long-term health insurance is designed to help you in the case of long-term health emergencies. For example, you may be required to spend time in a nursing facility. There are a certain percentage of people that will require the insurance and planning ahead can help you have the funds that you need to obtain long-term care. If you don't plan ahead at all and need to enter a long-term care facility, you could be headed for financial ruin when you have to pay your health insurance bill. 


Health care continues to skyrocket every year. By the time you are old enough to need long-term care, who knows how much the cost could be. Some nursing facilities charge hundreds of dollars every day. If you are in the care of a health care facility, for one or more years, the bill could be astronomical. Many retired people who enter nursing homes without insurance find that their entire life savings can be exhausted within a very short period of time. Long-term care insurance helps to offset some of the costs associated with this care and keep your savings where it belongs. 

Another advantage of long-term health care insurance is that it can protect you against inflation. Right now your dollars are worth a lot more than they will be 40 years from now. One of the great things about a good long-term care policy is that it has an inflation protection clause. Therefore, they guarantee that a certain percentage of their daily bills will be paid instead of a dollar amount. This way, all of those premiums that you pay over the years will not be a waste of money. 


The downside to long-term health care is that not as many people need it as they would like you to believe. When you look at the real statistics about nursing homes, the picture looks different. Over 2/3 of men that are over the age of 65 will never spend a day inside a nursing home. This number is about 1/3 for women. Only about 10% of men over 65 and about 25% of women stay in a nursing home for more than a year. 

What these numbers are telling us is that a small percentage of people go into nursing homes and an even smaller percentage of them stay in for an extended period of time. Therefore, if you do have to enter a nursing home for some reason, there is a good chance that you won't have to stay there for long. This makes one consider exactly how smart it is to pay all of those expensive premiums to long-term insurance instead of invest them.

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