Rachel Cruze: Who Needs Long-Term Care Insurance?
Written by
Nicholas Morine
Edited by
Katie Wudel
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
In a world where the future is uncertain, and the costs of healthcare are rising, understanding the need for long-term care insurance is more crucial than ever. Rachel Cruze of Ramsey Solutions shed light on this often-overlooked aspect of financial planning.
The Reality of Long-Term Care
Long-term care refers to a range of services and supports one might need to meet personal care needs over an extended period. This could include living in a nursing home, an assisted living facility, or receiving in-home care. As Cruze pointed out, the likelihood of needing such care is more common than many might think. Statistics suggest that 7 out of 10 Americans over 65 will require some form of long-term care, with a significant number needing it for more than five years, per Ramsey Solutions.
The Cost of Care vs. Cost of Insurance
The costs associated with long-term care are staggering. On average, just one month in a nursing home in the United States can cost $8,910. These expenses can quickly deplete savings and assets, making long-term care insurance not just a choice but a necessity for many.
According to Cruze:“The average 60-year-old man will pay $1,200 per year for a policy that covers $165,000 in care. The average 60-year-old woman will pay $1,960 for the same coverage… The average 60-year-old couple will pay $2,550 a year for a combined policy. The couples discount ranges from 15-30%, depending on where you live.”
Who Needs Long-Term Care Insurance?
While no law mandates the purchase of long-term care insurance, practically speaking, many will find it necessary. If you’re not in a position to comfortably cover the high costs of long-term care out-of-pocket, insurance is a way to ensure you don’t run out of money later in life. It’s also about peace of mind, knowing that you won’t be a financial burden to your family if the need arises.
Government Programs and Limitations
Cruze highlighted a common misconception about Medicare: It does not cover long-term care costs. Medicaid might offer some relief, but it’s designed for those with minimal assets and can involve spending down your assets significantly before you qualify. Relying on these programs is not a strategy — it’s a last resort.
The Benefits of Long-Term Care Insurance
Beyond the financial protection it offers, long-term care insurance allows individuals to maintain a degree of independence and dignity. It can cover in-home care, ensuring you can stay in your home longer, and it relieves your family from the full burden of care. The emotional and psychological benefits of this cannot be overstated.
When to Consider Purchasing
Cruze recommended considering long-term care insurance around the age of 60. This timing strikes a balance between being prepared and not paying premiums unnecessarily early. However, personal circumstances, such as family history of illness or current health issues, might necessitate an earlier purchase.
A Holistic View of Long-Term Care Insurance
Long-term care insurance is a critical component of a comprehensive financial plan. It’s not just about covering costs; it’s about ensuring quality of life, maintaining independence, and providing peace of mind for you and your loved ones. As Cruze advised, it’s essential to consider your circumstances, understand the options available, and make an informed decision about long-term care insurance.
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
More From GOBankingRates
