As you get older, there are a few numbers that should concern you even more than the amount of birthdays you’ve had: life expectancy averages and the cost of long-term care. Without a plan in place to deal with these factors, you may find yourself or your family members—paying hefty sums to make sure you have the attention you need in the final chapter of your life. Long-term care, a term used to describe services to help you cope with extended illnesses, disabilities or cognitive problems, is typically covered by neither health insurance nor Medicare. As such, many people purchase long-term care insurance to help offset the burden of paying for these services. But in some very important ways, long-term care insurance is different than other types of insurance and should be decided on only after considering its advantages and disadvantages.

Pros

• A long-term policy can cover a variety of potential needs, including nursing home care, assisted living, in-home care, hospice and more.
• A policy can relieve the potential financial burden for your family members.
• Long-term care can help you protect assets you want to pass on to your heirs.
• You may be able to buy a long-term care policy through your employer at very reasonable rates.
• If you are over the age of 40, you may be able to deduct premiums as medical expenses at tax time.
• Long-term care insurance can give you greater flexibility and choice in determining your care providers than Medicaid would.

Cons

• Long-term care insurance in general is very expensive with premiums often topping $2,500 per year.
• Your rates may increase over the period of paying into the policy.
• If a rise in premiums forces you to miss a payment, you could lose all the money you have paid into the policy.
• The terms of your policy may change after you have started putting money into it.
• You can be denied coverage based on a pre-existing condition or poor health.
• Some purchasers of insurance have had to fight to get benefits after being denied based on the fine print details of their policy.
• If you fall into a low enough income/asset bracket in retirement, you may qualify to have Medicaid pay for your long-term care.
• Paying money into an investment account instead of buying a policy gives you more flexibility with how you can spend your money in your later years.
• The average period a person receives benefits from a long-term policy is around three years, so you may pay for care you don’t use.
• If you own a home, you can hold the home’s equity in reserve as a precaution instead of paying into a long-term policy.

If you’re 40 or older, it’s definitely time to start thinking about your plan for long-term care. Whether or not this means buying a long-term care policy is up to you; it’s wise to at least start earmarking money for this purpose.