The question of whether to buy LTC insurance should be based on the same reason other
types of insurance are purchased "exposure to loss." We buy fire insurance in case our home is damaged by fire, auto insurance is a totally understood need and of course the need for life insurance is fully comprehended.
Why would we even hesitate about the purchase of Long Term Care Insurance? What really is at risk in the event of needing financial protection? In a few words everything you own is what is at risk. In the event of a nursing home stay the cost is firstly born by the ill person. At risk could be all assets including your home. The question is LTC insurance protection for everyone and the answer is no, long term care insurance policy is not for everyone. For a portion of the population, a long term care policy makes sense as an affordable and worthwhile form of insurance. Buying long-term coverage should not cause financial hardship to the family and should be based on an overall examination of your assets.
The rules governing financial responsibility of LTC expenses are based on the ability to pay and the assets available to be used for the care. Married couples generally can protect their home along with a certain amount to other assets. The amount of these assets varies based upon the state of residence of the couple. Some states allow as much as $100,000 in assets other than the residence to be exempt and other have a lesser amount.
In almost all situations involving a single person, all assets are exposed to the cost of a nursing home stay. Once again each state may have its own set of rules and it is important to be aware of those limitations.
It is impossible to predict who will need LTC, but past studies point out the likelihood of needing such care at 38% of those over age 65. These figures can be slightly misleading because it deals with entering and using a nursing home facility and often times it could be for a recover from surgery or just a short stay. The real numbers of who will need LTC for a period longer than 180 days is about 8%.