Suitable Long Term Care Purchasers
LTC insurance enables the senior citizen to maintain his or her independence. With adequate coverage, the individual does not have to rely on friends or family to provide custodial needs or necessary funds to help defray the costs of a nursing home stay.

Protection of personal assets may well be the most important reason for purchasing LTC insurance. Possibly, the question isn’t “Can I afford to buy LTC insurance?” but rather, “Can I afford not to purchase LTC insurance?” When an individual has substantial financial assets (and retirement income), the possibility that LTC expenses could mean a significant reduction in the person’s assets and standard of living is a real threat. Thus, the purchase of LTC insurance to protect one’s personal financial resources may well be a wise financial decision.

Paying periodic premiums is a more efficient and manageable way to provide for future LTC costs than having to rely on personal savings. LTC insurance provides that a person’s financial resources need not be liquidated either to pay for nursing home expenses or to spend down to satisfy medicaid eligibility.

For example, an individual with no dependents and few financial responsibilities may have little need for life insurance. Likewise, a person without substantial assets at risk may have little need to purchase LTC insurance.

If a senior citizen’s sole source of income is a relatively small pension and his or her financial assets are minimal, this person may already be eligible for medicaid reimbursement of LTC expenses. Also, because of the individual’s low income and limited financial resources, LTC insurance premiums may be unaffordable.

For example, Joe and Irene Brown are both 67 years old. Their only source of income is social security and a small pension ($200 monthly). They rent an apartment in a senior citizen complex, have a very small amount of life insurance (enough for burial) and usually maintain a savings account balance of no more than $1,000. They have no other assets other than personal possessions and an automobile. Are Mr. and Mrs. Brown prospects for LTC insurance?

Probably not. First of all, it’s doubtful that they could afford the premiums based on their relatively small retirement income. Secondly, they have no assets of any consequence to protect. They do not own a home or a large savings account or have other investments. In essence, they probably are already eligible for medicaid benefits should they be forced into a nursing home.