Financial Friday: The Importance of Long Term Care Insurance
HUNTSVILLE, Ala. (WAFF) - Americans are getting older. Every day in the U.S., 10,000 people turn 65. The Department of Health and Human Services estimates more than 50 percent of them will need some sort of long-term care.
WAFF 48 spoke with an insurance specialist at Redstone Federal Credit Union, Lekeisha Garner. She says a lot of older Americans rely on their savings to pay for long-term care. “It’s one of the biggest robbers of a nest egg or retirement when they go into long-term care,” said Garner. “Statistics show that 7 out of 10 older people who go into long-term care aren’t prepared, so they end up using their savings, and eventually it’s drained.”
She says in Alabama, long-term care can cost you, out of pocket, on average $5,000 to $7,000 a month which over the course of several years could quickly drain your savings.
“This is why we really encourage people to talk to an agent and figure out a long-term care insurance plan that works for them.”
She explains, there are several different plans. There’s the traditional plan where you pay month to month. “But we’re seeing more people who choose a hybrid plan. With a hybrid plan, you pull money out of savings and put that money into a long-term care plan. The good thing with a hybrid plan, you can pull the money out at any time. You can also use it as a death benefit for your family,” said Garner.
We all want to live longer, and ideally in our own homes, without placing any burden on our loved ones, and Garner says, that’s what long-term care insurance does.
For many Americans, the cost is prohibitive. A recent analysis shows the annual premium for a 65-year-old range between $1,700 and $7,200 per year. However, when you think about month-to-month care in a facility, it could cost you hundreds of thousands.
“Bottom line, people are living longer now than ever, so it’s really good to have a plan in place.”
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