Here’s one more way getting old is getting more expensive. Long-term care insurance, which covers expenses like nursing home care, at-home nursing care and other late-life needs, is fast becoming too costly for many retirees to afford, according to a recent study from LifePlans, an industry research firm. The average annual premium was $2,727 in 2015, an increase of 42% from 2005 and of 19% from 2010. Of those surveyed who were over 50 years old, 55% said they opted not to purchase coverage because it was too expensive.
Recently, a close family friend emailed me about his long-term care insurance policy, expressing his frustration over yet another premium increase. Despite the rising cost, he still feels good about his decision to have a long-term care insurance policy in place to help protect himself and his family. The discussion brought to my mind one of the most powerful and iconic scenes in children’s literature. I am referring to Willy Wonka and The Chocolate Factory (or Charlie and The Chocolate Factory).
When it comes to long-term care, two facts stand out. First, an estimated 70% of people will need such care, which will be costly. And second, most of them refuse to buy insurance to cover it. The question is, why? Part of the explanation, no doubt, is that long-term-care insurance is expensive. Some people also may be assuming, incorrectly, that they will qualify for government assistance to help them pay for nursing-home care. Rules are in place to disqualify many who won’t meet the strict conditions required.