|
Many clients,
as well as investment professionals, think they can self-insure against a long-term care event. They think that instead of
paying premiums, if they just invest that amount each year they will be safe. Well, first of all, they’re assuming that
an individual will have the discipline to invest each and every year, to not spend the money on other things and to weather
the market’s ups and downs for twenty or even thirty years. Second, what if you become ill in the meantime? If you have
Long-Term Care Insurance (LTCI), you’re covered from Day 1. Without if, you’re limited to whatever you’ve
been able to save in a short period of time. The table below illustrates that clients who self-insure would need to invest
an amount far greater than their LTCI premiums in order to meet long-term care expenses in the future.
|
If You Purchased a MetLife
LTCI Policy* |
|
Day 1 Total Lifetime Benefit |
$186,150 |
|
Total Lifetime Benefit In Year 20
(with 5% compounding inflation rider) |
$470,401 |
|
MetLife Value Plan Annual Premium |
$1,531.56 |
|
If You Self-insured |
|
Total Cost of Nursing Home Care Today For a 2.4 Year Stay** |
$148,044 |
|
Total Cost of Nursing Home Care In 20 Years For a 2.4 Year
Stay (assuming 5% inflation) |
$392,805 |
|
Annual investment amount needed (assuming 8% rate of return) in order to have funds available in year 20 |
$9,752 |
*Assumes the purchase of a MetLife Value Plan,
50 year old male, $170 per day, 3 years, 100 day elimination period, 100% home/community care, 10% marital discount, 5% compound
inflation rider, standard health rating.
*According to the MetLife Market Survey of
Nursing Home & Home Care Costs, September 2004, the average annual cost of nursing home care is $61,685 per year. According
to the Health Insurance Association of America, “Guide to Long-Tem Care Insurance” 2002, the average stay in a
nursing home is 2.4 years. |
