Financial Planning - 4 MUST To Plan For your Financial Freedom, Part 4

January 4, 2006 · Filed Under How to Manage Money

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This is the part 4 of the series 4 MUST to plan for your financial freedom, this series is written base on Liz Pulliam Weston - 4 ways to protect your financial freedomÃ©Ë†Â¥?/a>. You may read my Part 1, Part 2 and Part 3

Long-term care insurance: Safeguard your legacy

Long-term care insurance is a relatively new product, and financial planners are still arguing over who really needs it. Some say this coverage can both preserve your assets and ensure you receive high-quality care. Others say you’re better off skipping these policies and using the money to build your retirement funds so that you can pay for care directly.

First, if you’re under 50 or have more than $1 million in assets, you probably don’t need to worry about buying this coverage. If you’re over 50 and have $100,000 or more in assets you want to protect, however, you might want to at least consider long-term care insurance.

Here are the basics. Long-term care insurance covers the costs of serious illness that aren’t picked up by regular health insurance or Medicare, the government health program for people over 65. If you can’t properly feed, clothe or bathe yourself and need an aide to help you, long-term care insurance pays the bill.

At the other end of the economic spectrum are people who are simply too poor to pay for coverage, which typically costs $500 to $2,000 a year or more. If the premiums cost more than 7% of your income, says long-term care expert Bonnie Burns, you shouldn’t even bother with this coverage. If you’re truly indigent, you’ll most likely end up qualifying for Medicaid, the government program that pays for nursing home care for the poor.

Experts disagree about when to buy the policies as well. You’ll pay less for coverage if you buy it while you’re young (well, 40 or so — you usually can’t get a policy at a younger age). But the savings may be moot since you’re likely to pay for the policy for many more years before you actually need it.

Buy the policy too late — after 65, say — you’ll pay a lot more. Monthly premiums for a 65-year-old are generally two to three times higher than the same policy for a 50-year-old. Although recommendations vary, the best time to buy long-term care insurance seems to be between age 50 and 60.

If you’re interested in buying a policy, be prepared to do your research. Start by asking your state’s Department of Insurance for their buyers guide to long-term care insurance — most states produce one, Burns said. The National Association of Insurance Commissioners also produces a “hopper” Guide to Long-Term Care Insurance.

Recently on of my friend was admitted to hospital due to high fever. When I visit him, I saw there are a lot of patient that over 65 years old there. When have a conversation with them, I found that all of them is happy and grateful that they bought a Long-term care insurance before. If not they definitely cannot afford the expensive medical charges. From them I learned that we must plan for our future and as Liz Pulliam Weston said, start early can pay less for your long-term insurance. Please consult your agent before you make decision.

Tags: Financial Planning