Please understand that Long Term Care Insurance (LTCI) and Long Term Disability Insurance (LTDI)are NOT the same thing!
Long Term Care is literally payment for the need to “CARE” for you. Long Term Disability is cash payment in lieu of your ability of work at either your own occupation or any occupation. You need to understand the difference as it is huge.
So, if you had a health issue and needed someone to come in and bath and feed you, your Long Term Care Insurance would kick in. But Long Term Disability would not. LTDI will only provide you a portion of your lost wages, typically 65% for a limited number of months.
In this video, I show you why and when you should have insurance to cover your risks. I also show you what happens if you choose to self insure, i.e., cover the risks with your assets. Will you have enough?
Oh, you have all your money in an IRA, do you? So, if you needed $10k a month for a nursing home, how much would you need to withdraw from your IRA to cover that?
$120k a year, you say? Really? What about taxes? Indeed, with taxes you’ll need to withdraw $150k to pay for $10k a month coverage.
What if the market is down 20%. You’re taking mass withdrawals, paying taxes AND you’re down 20% on top of all that. Not a good place for long term stability.
Now given that the risk for this happening is so small, is it stupid not to buy an insurance policy to cover the risk? Of course not. I leave that to your determination.
We know the vast majority of people will not have huge long term care expenses. But we also know for the ones that do, it is incredibly costly.
And this is a case study of the need for insurance. Insurance should be used to cover catastrophic risks, not day to day expenses, which is why health insurance is so daggum expensive.
Don’t want to pay for the insurance coverage? Fine, you’re assuming the risk. For the VAST majority that will prove a profitable choice. For the few though it will be devastating.
I choose to be covered with a Long Term Care Insurance policy as I don’t want my wife to be destitute. Given that 41% of of all people who need long term care are under the age of 65, I also see the risk is much larger than most people my age realize. Still the risk is NOT likely to matriculate, but I literally don’t want to take that risk, thus I insure.
Should you? I don’t know. But you need to consider the costs and the risks and make an informed decision. ,