Reader Mail: Do I Need This Insurance Policy?

Several years ago my mom got me a long term care insurance policy through her job. She paid for it and I never thought about it until a year or two ago money got tight for her and she handed me the bill and said I should start paying for it. I didn’t really want the insurance and I definitely didn’t want to pay for it but she kind of guilted/scared me into continuing to pay for it.

Over the last year I’ve had a lot of unexpected expenses and I have credit card debt I’m trying to pay down. I let the long term care insurance expire but I’m still feeling a little guilty. For reference, I’m 29, own a house and car (obviously I’m still making payments on the house and will be for many years) and have a full time job, plus babysitting on the side a couple times a month. The long term care insurance was about $400-$500 a year.

Do I need long term insurance coverage? Should I get a new plan once I have my finances in order? Also I’ve heard that some of them are semi-scams that don’t cover much or have restrictions on what they will cover. At this point it kind of seems crazy to put so much money into something that I may not use for 40 years or more. But then on the other hand I guess I could get in a car accident and be paralyzed tomorrow? — S.L.

Yes, you could get in a car accident and be paralyzed tomorrow. You could also die in a fire, or drown, or get cancer, or have a heart attack. We are human, we are not immortal, and our lives can change at any given moment.

Things happen to ourselves and our things—that’s why we get health insurance, renters or homeowners insurance, fire, flood and earthquake insurance, car insurance, life insurance, and all the other things out there we think fit to insure on top of all the other bills we have to pay.

The point I am trying to make is that there are a lot of things that we’re financially responsible for, and a lot of different insurance policies that are worth paying for because of the circumstances of the individual world we live in. In the individual world you live, S.L., is long term care insurance a priority?

While you think that over, I’m going to tell you now that you’re the first person under the age of 50 who I have ever heard of buying and maintaining a long term care insurance policy.

Long term care insurance typically covers basic daily care for you for an extended period of time, if say, you get Alzheimer’s disease, or have a chronic illness that requires a part or full-time nurse to bathe, dress and feed you on a daily basis at a hospital, or at home or at a nursing facility. Notice those terms I’ve used—Alzheimer’s and nursing facility—because they’re typically associated with the elderly, as is long term care insurance, because it’s more likely you’ll need to have it when you’re reaching the age of retirement. People typically decide to buy long term health insurance in their 50s, and by the age of 60. Buying it before then is atypical.

You are 29—do you know any other 29-year-olds with long term care insurance? That question doesn’t matter as much as: In your individual world, does long term care insurance make sense? Does your family have a history of developing chronic illnesses at an early age? Is that why your mother felt compelled to buy you a policy? If yes, then long term care insurance isn’t such a crazy thing to get at your age. And if yes, do sit down and read the policy over—you should definitely know what it does and doesn’t cover.

In my individual world, I got very sick when I was 18, so I have a 20-year-term life insurance policy that would ensure that my parents are financially taken care of if I were to die today. I pay for it because I can afford to shell out $35 a month—it is in no way a burden for me.

My folks have earthquake insurance, because they live in California, and an earthquake is a real thing that could happen in their individual world. We prioritize on what we should pay for based on our circumstances. You have nothing to feel guilty about if you decide not to pay for a thing that doesn’t make sense in your individual world.

 

See previous columns here. Photo: Shutterstock/Mandy Godbehear

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8 Comments / Post A Comment

Megano! (#124)

Oooh yeah that reminds me I inherited some kind of life insurance policy that my Dad had paid for, and then when he died, it was still partially paid for, but I think all that money is gone now and they want me to pay like $1500 a year or something for it? It’s definitely more than I can pay since I haven’t had a steady income like, ever.

NB (#1,594)

Oooh! Topical!

One article I read recently that gave me pause regarding long term care insurance was this one: http://www.getrichslowly.org/blog/2012/07/02/is-long-term-care-insurance-worth-it/

In a nutshell: Author weighs costs and benefits of LTCI, observes that costs may change substantially as you age/actually start using long term care, even if you are an existing customer. That’s not to say that LTCI is bunk, but a warning: if you do think your personal situation calls for long term care insurance, please, please, please read before you sign, and make sure that you know what you’re getting into (Ha! For insuring the coverage of your insurance! The irony!) so you don’t run into a nasty surprise at a time when you can’t afford it.

Oh, Mike Dang. I am 24 and have had a long-term care insurance policy since 22, after watching my father be forced to retire at 45 and die slowly from a long-term illness not covered by BlueCross (fuck you, fuck you, fuck you BlueCross) or, later, Medicare. It only takes that and you will sign up for ALL THE INSURANCE YOU CAN GET.

jfruh (#161)

Speaking of which, I have a life insurance policy that I bought from my step-uncle when I was like 21, because he convinced my mom I should have it? It’s like, easier/cheaper to get it early or something? Anyway, I have no kids nor plans to have kids, and my wife has a job (not that a chunk of cash wouldn’t console her if I died) so I sort of resent paying for it every year. On the other hand, presumably my step-uncle would notice if I stop paying it, since despite his semi-retirement his name is still on the bill as my agent. What should I do?

Mike Dang (#2)

@jfruh I keep mine because if I were to die today, my parents, who are my beneficiaries, would get more than $1 million. I’m not sure what your policy is worth, but it might be worth it to you to keep it if your monthly premium isn’t very much. But get rid of it if you think it doesn’t make sense for your circumstances.

mishaps (#65)

I am not sure if there is a difference between long-term care insurance, and long-term disability insurance, although I was pretty sure there was before I started thinking about it. Anyhow!

Long-term disability insurance is, I think, totally worth it, because God forbid you get hit by a truck tomorrow, you know? Insurance meant to cover your nursing home stay in your 80s, you don’t need, but if you can find an affordable disability insurance policy, take it. I believed this even before I met a former financial planner who said that it had been her number-one tip to her clients.

So my advice is, talk to the people who provide your house and car insurance and see if there is some sort of bundle they can offer you, and find out what it would cover. It is less important than paying down your credit card debt, yes, but it’s worth thinking about what would happen if you couldn’t work, and what you can do to protect yourself against that.

30 here, and I have long term care because my job pays for it. I also have life because it’s only $1.16/month!

smack (#307)

It’s much cheaper the younger you are – my husband and I have an agreement to buy it on our 40th birthdays, respectively. We’re not having kids, so it’s I think especially important for us (not that you want to rely on your kids to take care of you anyway).

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