Points to consider before buying long-term care insurance

Q: When I retired two years ago at age 55, I purchased long-term care insurance for my wife and myself. I thought I had researched the subject thoroughly, and I was fully aware that the premium was not guaranteed. I've now read that most retirees with less that $250,000 in savings should not purchase long-term care insurance. Any suggestions?
- T.J.J., via e-mail

A: The answer centers on weighing the cost of such protection versus the benefits you might receive, says Jim Farrell, senior financial adviser at Univest Wealth Management & Trust in Souderton, Pa.

You must decide whether it is worth spending perhaps $2,000 per year in premiums to protect $250,000 in savings. Assuming the premiums stay level, you would spend $20,000 over the next 10 years to protect that $250,000.

Besides protecting your savings, you need to factor other details into your buying decision, Mr. Farrell says. These include your debt load, as well as overall goals and objectives.

For instance, how important is it for you to preserve your assets to perhaps pass on to your heirs?

If long-term care services cost $50,000 per year, $250,000 would be depleted in five years without long-term care insurance, leaving nothing for your spouse or other heirs.

The American Health Care Association and National Center for Assisted Living have produced a 16-page booklet that spells out many terms and some of the pros and cons of long-term care policies. You can order it by phone (800-628-8140) or view it directly online at: www.longtermcareliving.com.