Is Long-Term Care Insurance a Good Idea?

MAKING SENSE -- May 25, 2012 at 10:43 AM EDT

Is Long-Term Care Insurance a Good Idea?

Registered nurse Susan Eager pays a house call visit to a patient in Denver, Colo. Photo by John Moore/Getty Images.

Paul Solman frequently answers questions from the NewsHour audience on business and economic news on his Making Sen$e page. Here is Friday's query:

Name: Nancy

Question: What happens to long-term care insurance in the new health care? I have paid for long-term care for over 10 years. My Board Certified Elder Law Attorney told me it was my "best decision." Was it?

Paul Solman: I don't know if there's anything in the new law that pertains to long-term care insurance. But I'm wary of it, and have never bought any for my wife or myself. Here's my reasoning.

We're in our late 60s, just a hair ahead of the Baby Boom. If we live a long time, so will tens of millions of our contemporaries, I'm guessing. If we need long-term care, they probably will, too. But if insurance companies are flooded with claimants, they figure to be strained to honor their obligations. That suggests, at least to me, that they will be forced to stint on payments, impose all sorts of restrictions, or maybe fail to pay entirely.

My choice, then, has been to self insure. My wife and I have saved since the 1970s for the purpose of financing our old age. And since our four parents lived to an average age of 89, and two of them needed long-term care, we've saved assiduously.

In general, my answer to a question like yours, Nancy, would depend upon your age and your savings. Given your situation, I would ask your attorney to review the terms of the long-term care policy and the financial health of the company that issued it.

This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions.

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