1. Asset Protection

Long-term care costs are a liability waiting to happen. Your assets can be vaporized by the many expenses associated with lengthy illness, but long-term care insurance can protect these assets from such depletion.

The government provides two types of insurance most people rely on in their retirement years: Social Security and Medicare. Social Security was designed as a way of providing some income for those who retire and have no other source of income. Medicare provides health insurance if you do not have any outside coverage.

Many people are under the false assumption that government will pay for long-term care coverage under Medicare or Social Security. However, the only way the government will pay for long-term care coverage is if you qualify for Medicaid. To qualify for Medicaid, you must first spend down your assets. In other words, you must first become poor. Once this happens, you qualify for a government program with few choices.

According to the US General Accounting office, the costs of long-term care today are over $50,000 per year, and in the next twenty years these costs are expected to triple. This means a fifty-year-old today can expect to pay more than $300,000 per year at the age of eighty, and if you are married, the risk to financial health doubles. The average nursing home stay is 2.3 years, and one out of five patients over age sixty-five can expect to stay longer than four years. This is a very real risk for anybody with an asset base.