When you were working, you were most likely covered by disability income insurance, in case something were to happen that would prevent you from performing your job, and prevent you from earning a living. When you stop working, however, you still have an income to protect. The careful planning that contributed to the savings and investments that will furnish your income when your retire will also help you protect it. Thinking ahead and being prepared will ensure that you are ready for whatever comes your way.
Your disability insurance protected you from extended illness or injury. When you retire, the risk for injury and illness does not disappear. If you become disabled, you could require long-term custodial care, which is not covered by Medicare or most retiree health insurance plans. While your retirement income won’t stop, your expenses may increase dramatically. For 2005, the average national cost of one year in a nursing home was $74,0001, and at this cost the chances are your retirement income and/or assets alone will not be enough to fund your long-term care needs.
Long-term care insurance (LTC) provides coverage that will cover care, health, social, and support costs incurred during a long-term illness or injury. Where disability insurance would have replaced a portion of your income during this time, a LTC policy will help protect your assets and income by providing a daily benefit of your choice to cover the cost of your care.
The earlier you buy an LTC policy, the better, as it is usually much less expensive to purchase at an earlier age. The LTC policy has become a definitive component of many people’s financial plan, and can protect your loved ones from financial burden in the event of a long-term or catastrophic illness.
1 2005 Metlife Mature Market Institute survey