Health Cost Paradox

Long-term care policies make sense if you are “concerned about spending down your resources,” said Christopher P. Covill, a partner at the Mercer consulting firm. The problem is, you don’t know what your health needs will be or how much they will cost. Covill said that long-term care policies typically offset costs but don’t fully cover them.

Questions to ask

If you think long-term care insurance is a good idea for you, shop around. Some of the issues to check out include whether a policy is inflation-adjusted so that payouts will rise over time; how flexible it is about where services are delivered; how good the company’s credit rating is (this will give you an idea of how likely the company is to be around when you need it); and what happens if you miss a premium payment.

Some policies offer a partial return of premiums if the benefits are not used. While features like that may make policies more attractive, Covill said that few people buy any kind of long-term care. When employers offer long-term care policies, usually on better terms than are available on the open market, fewer than 10 percent of employees opt for the benefit, he said.

That’s because buying long-term care insurance means facing mortality, your own, Covill said. “I think you need it, Martha, but I don’t. I’m going to die on a beach, running,” he joked.

Just remember: In the long term, we’re all dead, but in the longer term, it’s more expensive.

Martha M. Hamilton writes a regular column for the AARP Bulletin on retirement and financial issues.