We went to my Mom’s senior center apartment on Saturday and enjoyed walking around a Holiday Boutique they were hosting. One of my brothers was there, too. While I was there, I took care of a couple bills she had.
My Dad passed away last year and I became the primary “money guy” for my Mom. I had started taking care of their checkbooks, pensions, taxes, and insurance a few years ago. I have three older brothers and each of us have an informal area of responsibilities.
My Dad did a great job setting up my Mom for what she would need financially. The biggest thing he got right was Long-Term Care insurance (LTC). Her LTC plan pays for her monthly rent, dining plan, and assisted living care in total. The bill goes right from her senior center to the LTC company and we only get an advisory notice in the mail.
If you wonder how much assisted living costs nowadays, hers is $7,300 a month, or about $87K per year. That’s about 20% more than the average assisted living facility nationally (per Grok AI), but I think we also live in a higher-cost healthcare state (MN) overall.
Another thing to know about LTC is that the insurance doesn’t last your whole life. It’s capped at a set amount. I think my Mom, who is 87, has about 30 months of coverage left in her plan. After that, her LTC costs will be paid out of her savings. Most of that came from the sale of their house a few years ago.
My wife and I don’t carry LTC insurance. We’re in the fortunate situation that we feel we can afford to be self-insured. We sat down with a couple LTC agents about 10 years ago and looked at all of the numbers. Our financial planner agreed, as well. Since then, our investments have only gotten stronger (even faster than the expected 3-6% annual LTC cost growth), so I’m sure we’re doing fine on that front.
Do you have a parent that you take care of? Did they need LTC insurance? Do you carry LTC insurance for yourself?
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MrFireStation 
My Mom also has LTC coverage and we used it with my Dad before he passed. They were able to sign-up before premiums went up a bunch and several insurers left the space. Like you, I’m not a fan. A better term is that it is a savings account for long term care with an insurance company that will make more money than payout most of the time.
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It’s actually worked well for my parents. Not everyone goes into assisted living and if they do, they are not typically there long before they pass, so there is a lot of “slip”. I would estimate my Moms co tribulations were about $45K over 30 years and she’ll probably end up with $400K benefit before it runs out. They probably broke even on my Dad.
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Agree with others on the self-funding model.
I had a colleague who was a huge proponent of LTC insurance 20 plus years ago when premiums were much lower. He retired at age 68 in December 2008 and as a result of a lingering cough which began in February eventually had a lung x-ray in April and learned of a large tumor for which he was hospitalized in May and never left the hospital. His widow died one year later.
Most people on average need skilled nursing for no more than 36 months. Yes, there are outliers.
My wife is 70 and I am 63. If one of us becomes infirmed, our lifestyle would diminish as one of us would care for the other and we could afford in home assistance from our income sources. If the second to die needed skilled nursing or assisted living, the sale of our condo would easily fund such care, but likely the care could still be funded from income sources.
Long term care insurance like many products one “needs” is sold through fear. This is not any different than my former mother-in-law paying into life insurance 25 years ago when her husband died. She wanted the insurance to provide for her two children and four grandchildren when she goes. She is still alive and her $1M valued property will be more than sufficient to help her heirs. She could have had much more enjoyment without paying the high premiums for the past 25 years!
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Yes – most people end up not needing LTC. My wife’s parents passed away relatively young. I’m not sure why my Dad bought the policies, but as I answered on another comment, for them it paid out terrifically. They were “unlucky” to need assisted living, but “lucky” to have had the policies.
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Except for the first 90 days, my mother-in-law’s LTCi policy covered the full cost of her care for 4 years. She started receiving care at home, transitioned to an assisted living facility, and then moved into our home when COVID hit. When she died she still had another year (or more) of benefits remaining in her policy. My wife and I share a policy with 10 years of benefits. We’re concerned about a catastrophic event, not just a year or two of care. I don’t think most people really understand the true cost of self-funding long-term care. I made a few videos about self-funding for long-term care: the best ways to do it and the worst ways to do it.https://www.youtube.com/playlist?list=PLFh5DRUnkuqBweswB0-XwNBQmT8T5zlwl
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Thanks for sharing, Scott – Your Mom’s situation is very similar to my Mom’s. Clearly from your videos you are an outspoken proponent of LTC insurance, although you also have some good videos on self-insuring.
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Except for the first 90 days, my mother-in-law’s LTCi policy covered the full cost of her care for 4 years. Most people who need long-term care receive their care at home. She started receiving care at home, transitioned to an assisted living facility, and then moved into our home when COVID hit. When she died she still had another year (or more) of benefits remaining in her policy. My wife and I share a policy with 10 years of benefits. We’re concerned about a catastrophic event, not just a year or two of care. I don’t think most people really understand the true cost of self-funding long-term care. I made a few videos about self-funding for long-term care: the best ways to do it and the worst ways to do it.https://www.youtube.com/playlist?list=PLFh5DRUnkuqBweswB0-XwNBQmT8T5zlwl
Hint: a $100,000 long-term care expenses does not cost $100,000. It costs a lot more than that.
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According to Grok, skilled full-time, in-home nursing care runs about $100-$150K per year. That could be an alternative for someone with $$$ or split between 2 parents. I am sure the challenge is finding the right person. I imagine there are agencies that help you with that.
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