Dear Michael: We have quite a bit of farm rental income coming in, as well as income from other sources. We are close to age sixty-five and many of our friends have long-term care insurance, but we feel that with our income, we can pay for just about any type of care without any problem. Isn't it true if we have enough income, we really don't need to buy long-term care insurance? – LTC Dilemma


Dear Dilemma: When people in our generation consider long-term care insurance, we think back to the days when we had a friend or relative in a long-term care facility back in the sixties or seventies. Most people think of long-term care insurance as basically a basic needs insurance – provide for a bed, a roof over their head, and three meals a day and that's about all you need.

However, even though many people still do not buy long-term care insurance (for most, it's a question of affordability), these same people would never dream of dropping their Medicare Supplement policy – even though premiums on Medicare Supplements keep rising like any other medical insurance coverage.

The odd thing is if you have enough income, which risk represents the higher costs?

Certainly if you have this high of an income, surely you can go without your Medicare Supplement policy. You have enough income to meet any unpaid costs not covered by Medicare. But people wouldn't dream of not taking a Supplement policy.

Oddly, the chances of maxing out your Medicare Supplement policy are roughly about the same of the chances of you or your spouse needing long-term care in the next year's time.

However, meeting all of the co-pays and gaps that a Medicare Supplement policy will never costs you seventy, eighty, ninety or a hundred thousand or more per year.

Long-term care costs easily could!

Seventy five thousand is the 'average' costs of care for everyone in this state receiving long-term care in 2012. 'Average' meaning half the people receiving care pay less – half the people pay more. Which side of average you end up on is all just a guess.

Of course, this is the same reason you carry medical insurance. You don't know if you're going to be the one who needs to check their high blood pressure for the rest of your life, or the one who undergoes surgeries to recover from the effects of high blood pressure medicine. One pays for the medicine and check-ups – the other can end up spending hundreds of thousands of dollars in costs for the surgeries. The same is true of long-term care insurance. Just like any medical 'pool' costs, everyone contributes to the medical insurance pool via an insurance company and the company pays claims from this pool of premiums collected.

Now I'd love to tell you that costs for premiums have been going down because we are taking better care of ourselves, but you know and I know that isn't true. Premiums are continuing to go up and up because costs and claims continue to rise annually.

In addition to the whole 'insurance' concept, you also have to consider the 'human' aspect of insurance.

I recently had one of my best and oldest clients spend time in a long-term care facility due to dementia and Alzheimer's disease. He recently died. I talked to his widow afterwards and she expressed it in a way that a person would have to live through to totally understand it.

She said 'Michael, I'm so glad we had long-term care insurance for my husband. It wasn't that we couldn't have afforded the costs of care – which were in the six thousand plus per month range – but the long-term care insurance allowed me to make the best choices for my husband's care. If we hadn't had the insurance, I would have been left choosing between the best care for my husband and being able to pay for my own basic costs of living'.

'It would have been a really tough thing to think of deciding between care needed for him and how am I going to pay for my own insurances, electricity, and all other costs of living'.

'Because we had the insurance, I could make the best decisions for him and still live – which also allowed me the time and energy to spend more time with him during his last years – and for that, I am eternally grateful I had the insurance. It allowed me to take care of him beyond even his own medical needs'.

I think that pretty well sums it up about whether or not you should buy nursing home insurance.

You don't 'need' nursing home insurance, the same as you don't 'need' medical insurance, or car insurance or homeowners insurance. You can pay to replace any of these costs in your life – if you have sufficient income or assets.

If you wouldn't consider dropping any of these other insurance coverage, why wouldn't you consider putting your premium into the pool with everyone else for long-term care? You pay into the pool and then hope you'll never 'need' to use it. But if you do, you'll be happy you, as well as other people, have contributed and continue to contribute in order to pay for your costs of long-term care!

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