How Much Long-Term Care Insurance

Kevin McCormally: I am Kevin McCormally of Kiplinger's and I am with Kimberly Lankford, the Insurance Editor of Kiplinger's Personal Finance magazine to talk about the high cost of Long Term Care Insurance. Kim we know that more and more people are buying a Long Term Care Insurance. It’s the boomers age, they see the need for this but it's really expensive, what is it cost? Kimberly Lankford: Well the young you are when you buy the policy the less expensive it is. If you buy it at 55 it can cost anywhere from $2,000-6,000 year per person. If you buy it at 65 it could be $3000 to $7000 or more per person. Kevin McCormally: Okay, Kim what can you do to hold down the price? Kimberly Lankford: Well the good thing about Long Term Care Insurance is you have all of these choices that you can make including the daily benefit, the waiting periods, the period of which that you get receive the coverage and you can make some decisions there that can really help you minimize the cost but provide very solid coverage. Kevin McCormally: What do you suggest Kim? Kimberly Lankford: Well the first thing to do is look at your benefit period and that’s the amount of time you'll be receiving coverage. Back of few years ago many, many people would get life time coverage so they would have -- no matter how many years they needed in a nursing home. But most people only need care for just under three years, so you can lower that benefit period to about three years and that can cut your cost in half. Kevin McCormally: Kim I hear something about Shared Care, what is that all about? Kimberly Lankford: Well if you do have family history of long lasting conditions like Alzheimer’s disease you may want to have a longer benefit period. One way to minimize that cost is if you are marry to have a Shared Care policy that means that each of you have a pool of money, so instead of getting two, three year benefit periods you get a pool of six years and if one of you needs care for long time you have that coverage and the other staff still has that two years are still left over for coverage for themselves. Kevin McCormally: Anything else you can do to hold down the premiums of this Long Term Care Insurance? Kimberly Lankford: Well you really need to a carefully at the daily benefit you choose. I mean the average nursing home cost across the country as about $200 a day, but in many parts of the country it's much lower then that and assisted living is even less. So you may want to provide get a lower daily benefit and know that you may have to cover some of those extra cost out of your packet if you need expensive care. Kevin McCormally: Kim what about inflation protection built into these policies? Kimberly Lankford: That is one area where you don't want to skip. The cost of care has an increasing by about 5% per year and if you don't get an inflation protection you really will have limited coverage by the time you need it. Kevin McCormally: Okay, thank you, Kim.