Right now, we are finally entering what many financial analysts had predicted would happen for a while: inflation. Unfortunately, it appears that all indicators point to hyperinflation, rather than general inflation. Some commodities, goods, and services are already rising in price tremendously. Now, how might this impact long-term care or long-term care insurance premiums?
First, we need to understand what long-term care insurance is.
For those of you who have never really looked into long-term care insurance, if you are in your early to mid 50’s, now is the “sweet spot” to purchase a policy. This is the time when the risk is still relatively low, but about to increase due to your age and health risks, and the cost is more affordable.
Of course, the earlier you begin a long-term care insurance policy, the more cost-effective it might be, but if you are in your mid-30’s to early 40’s, it might not be practical at this stage in your life, unless there is a family history of serious health issues that you worry about, like early-onset Alzheimer’s, for example.
Second, we need to understand what long-term care insurance premiums provides.
Protection. If we can condense it down to a simple word, it would be protection. While you may be saving for retirement, investing in a 401(k) or have your money in other investments, all looking toward your retirement years, how might you protect it if you or your spouse or other dependent requires long-term care in the future?
Consider nursing home expenses, such as in Alaska, where it can cause more than $300,000 annually. That’s just right now, without factoring in inflation.
Many people have no idea just how much long-term care costs might be, and they never think they will need it, but millions upon millions of seniors require some type of long-term care, and they never anticipated it.
Third, what about that pesky inflation?
While you can’t predict inflation or just how much goods or services will cost in the future, you can understand that the cost of long-term care will increase. It’s not only inflation that is going to raise those prices, but basic supply and demand economics.
As the baby boomer generation is now retiring and more seniors will require care, the cost of care will rise. If you think $300,000 each year for nursing home care is expensive, just wait five or 10 more years.
You will need to sit down with an experienced broker or agent to discuss long-term care insurance options and long-term care insurance premiums and find out if they will adjust for inflation or if there will be a specific financial payout limit over the course of the payoff policy.
In other words, if your long-term care insurance policy will provide long-term care for three years, what is the maximum benefit allowed for that? Does it adjust for inflation or not? Some policies may do that, but the cost may increase now.
The only way to really dig into this accurately is to speak with an experienced and licensed long-term care insurance broker or agent today. But make no mistake, the cost of long-term care will rise, like everything else, and if you want to protect your retirement savings and investments, this is an insurance you must consider.