Who Should Not Buy Long Term Care Insurance

People with low income and net worth should not buy long term care insurance.  They have other, more immediate, priorities (food, shelter, etc.) and will likely soon qualify for Medicaid.  While the long term care services provided by Medicaid are not nearly of the high quality (fewer choices and fewer available resources) as private pay, Medicaid does provide a safety net.

What minimums do I use to financially qualify someone for long term care insurance?  As a general rule, a couple should have a combined annual income of at least$50,000 and a net worth of at least $150,000 before considering long term care insurance.  For a single person, the minimums are about$40,000 annual income and $50,000 net worth.

An exception would be a situation in which adult children can afford and are willing to pay the insurance premiums.  that can be a good way for adult children to remove the financial risk to themselves of ultimately paying for their parents long term care services.  One way or another, the children always pay the cost of their parents’ care…either as a result of a reduced inheritance because the parents did not have long term care insurance, or a reduced inheritance because of insurance premiums paid by someone.

In short, someone without much income or assets should not consider long term care insurance.

© Raymond Smith, The Long Term Care Specialist, 2010.

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