Why Is Long-Term Care Insurance Important?

With the ongoing advances in medical science and healthier nutrition practices, the average American is living longer than in previous decades. Consequently, the longer people live, the more income they'll need to sustain themselves. While government benefits make some provisions for senior citizens, rising health care costs require additional forms of protection. In some cases, long-term care insurance can play an important role in planning for future health needs.

Long Term Care

• As the body ages, any number of physical conditions can develop, making it difficult to carry out essential daily living tasks. Conditions such as heart disease, Alzheimer's and overall frailty can significantly limit a person's ability to care for himself, let alone work and earn a living. Individuals who suffer injury or illness at younger ages may also find themselves in need of long-term care services. These factors make long-term care insurance an important piece of protection as average life spans surpass the ability to earn sustainable incomes. Long-term care insurance is a way for people to ensure they receive whatever care they need in their senior years, be it a nursing home, assisted living facility or alternative living arrangements.

Government Health Care Benefits

• The Medicare and Medicaid healthcare systems are government-sponsored forms of health care insurance for senior citizens and disabled individuals. Medicare exists primarily for senior citizens, providing insurance protection for hospitalization, medical care and medications. Medicaid provides insurance for low-income households unable to afford the costs of health care on their own. While these programs offer certain levels of coverage, individuals who suffer from long-term conditions or illnesses face significant out-of-pocket costs that can quickly deplete financial resources. Long-term care insurance acts as a financial buffer by paying the out-of-costs not covered by government-sponsored programs.

Health Care Costs

• As of 2008, annual incomes for persons 65 and older averaged $29,248, according to the National Committee to Preserve Social Security and Medicare. Available income sources included Social Security benefits, work earnings, pensions and earning from assets. As of 2010, the average cost for nursing home care ranged around $75,000 a year while the costs for an in-home health aide ran as high as $55,000 a year, according to Kiplinger's online reference site. While Medicare covers a portion of medical costs, an unexpected injury or illness may require treatment and care services covered by Medicare. Without long-term care insurance, someone who has built up a considerable savings reserve can quickly run through available assets just to cover the costs of medical care.

Cost Considerations

• The costs for long-term insurance coverage can vary considerably depending on how comprehensive the coverage is. Consider factors such as available assets and anticipated health problems when deciding on a long-term care plan. Within the United States, the average premium cost paid toward long-term health care insurance is $2,150 a year, according to an October 2010 Wall Street Journal Online article. In general, premium rates can vary depending on the state, a person's health condition, and her age when taking out the policy. People considering long-term coverage must also anticipate what types of care they will need once they reach retirement age. In effect, maintaining a long-term care policy requires an ongoing investment as premium costs can run high.