Some time ago, when you were newly married and your children were young, you may have purchased life insurance. And you may still have that insurance today. But do you need it? As we age and our circumstances change, it may be a good idea to consider replacing life insurance with long-term care insurance.
We usually purchase life insurance as a backup plan to support a spouse, child or other dependent should we die early. You might, for example, have purchased life insurance to cover a child’s college education if you weren’t around to pay the bills.
However, when you become an empty nester, and providing your spouse is independent, you may want to consider cancelling your life insurance; the money you’d spend on life insurance premiums can be reallocated to long-term care insurance.
Long-term care insurance protects you from an enormous financial drain: the cost of home-health care and/or a nursing home. Most people over age 65 will need long-term care at some time in their lives, and it’s expensive.
Costs vary by state. In Illinois, according to studies conducted by Genworth, the annual cost of a home health aide is $46,904; for a private one-bedroom unit in an assisted-living facility it’s $48,600, and for a private room in a nursing home, the cost is $70,445.
Despite that price tag, around a third of nursing home residents pay all of their nursing home costs from their own funds, according to AARP.
Even if you plan to stay active and healthy, and keep working longer than your parents did, there’s good reason to take on this expense now: Long-term care insurance will cost you less when you’re younger and in good health than if you wait until you’re older.
While you probably don’t need long-term care insurance now, don’t wait too long to buy it. It may be too late.