Focusing on capital preservation is one of our main goals in helping clients manage their assets. Over the years the average life expectancy has been on a steady rise making asset preservation even more important. It is estimated that 70% of people 65 years or older will need some form of long-term care (LTC) during their life.1
With a 70% probability that LTC will be necessary, one can build a solid argument for purchasing a LTC insurance policy to help cover these expenses. According to Genworth Financial, a leading provider of LTC insurance for individuals, the average cost for a private nursing home room in 2015 was more than $91,000 per year.
With cost for LTC this high, the retirement and investments accounts that you have spent a lifetime accumulating could be depleted in a very short amount of time, and Medicare doesn’t help to cover these expenses. One of the best ways you can protect your assets from this pitfall is to purchase insurance that will pay the expenses.
Here are a few of the benefits of owning a long-term care policy:
- The insurance company guarantees that if and when the time comes to use the policy, the funds will be there to help pay for the expenses.
- Because the insurance company is taking on the responsibility of paying the potential cost of care, you can relax a bit when it comes to fluctuations in your investment accounts.
- The amount of money you will spend on the premiums is usually less than the cost of the care itself, should you use it.
- Qualified LTC policies pay benefits that are income tax free.
There are many factors to consider when deciding whether you need LTC insurance and how much is appropriate. If you would like to have a discussion about LTC, we are here to help you understand your available options. LTC insurance can be a great tool for managing concerns and worry about outliving our assets as we progress in years and easing this concern for many, can be worth more than the price of the premium.
1 American Association for Long-Term Care Insurance
Insurance products are offered through nonbank insurance agency affiliates of Wells Fargo & Company and are underwritten by unaffiliated insurance companies.
Wells Fargo Advisors Financial Network did not assist in the preparation of this report, and its accuracy and completeness are not guaranteed. The opinions expressed in this report are those of the author(s) and are not necessarily those of Wells Fargo Advisors Financial Network or its affiliates. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Additional information is available upon request.