If you own a home do you have homeowner’s insurance?
Of course, you do! If something major happens to your house you want to be able to replace it. In 2014, only 5.3% of all homeowners made a claim on their policy, including everything from fire to theft.
Do you have automobile insurance if you own a car? On average, a person with automobile insurance files a claim once every 17.9 years, equating to a 5.6% likelihood. This insurance is typically required in most states.
Now, imagine this scenario: If you were confronted with a 75% likelihood of encountering a $200,000 expense, and you had the option to purchase insurance to cover it, would you?
For most retirees, this is exactly what they face. The expense is long-term care. Recent statistics show there is a 75% probability that someone age 65 or older will face some type of long-term care event in retirement. In Raleigh, the average cost of long-term care is approximately $82,000. On average, men require care for 2.4 years, while women need it for 2.6 years. However, these figures do not include individuals with Alzheimer’s disease, which can require care for over 10 years. As a result, the total expense can far surpass $200,000.
Today people are choosing to address their long-term care needs in several ways:
- Self-fund (most used option) – fails to leverage resources to their maximum potential.
- Purchase traditional long-term care insurance, which is expensive and rises each year.
- Purchase a life insurance policy that has a long-term care rider on it.
- Purchase an annuity that has a long-term care rider.
As an hourly consultant, I help people evaluate all the options. I can help you understand what is best for your situation before you purchase anything. The statistics are too great to ignore; if you aren’t prepared for a long-term care expense, you could be putting your and your spouse’s retirements at risk.