It’s a little weird to think about getting long-term care insurance when you’re young. But blogger Jackie Lam makes a compelling case for why paying now makes sense for a Grownup budget.
Several years ago, when I was in my late 20s, a benefits representative gave a presentation at my workplace on lesser-known employee benefits. While I regarded most of the benefits the rep showcased with mild interest—travel insurance, free legal counsel—one benefit did yield my attention: long-term care insurance.
After a call with an insurance agent to ask some questions and get a quote for a monthly premium, I was sold. Because the policy was offered through my employer, I would automatically be accepted into a plan. No medical examination, no lengthy application process, and the plan would stay with me when I hop jobs. I decided to opt in and signed up for the policy with the highest coverage amount.
But a few months ago, when I had absentmindedly let a payment slip through the cracks and received a policy termination notice in the mail, I thought:
Why exactly did I sign up for this? Do I need it?
For the unacquainted, long-term care (LTC) insurance is used to pay for out-of-pocket costs if you require substantial assistance with everyday activities, such as using the toilet or getting dressed. It can help to cover costs for care received in a nursing home, assisted living, or for adult day care. Insurance is one of those unpleasant things to think about (partly because to benefit from it something disastrous or awful has to happen).
Though it’s a grim subject, getting old and ill is a reality that we all face. The last time I checked, the odds of aging are 100 percent—and the odds of Benjamin Buttoning (a.k.a. reverse aging) is 0 percent.
There are many more exciting things to think about doing in my golden years, such as getting cryogenically frozen or signing up for a commercial space plane to blast off to Mars. But there’s probably a far better chance I’ll need some form of long term care. I looked into it, and the average cost of long-term care is quite steep, ranging anywhere from $45,000 to $94,000 a year.
Getting LTC insurance in your 20s is a little weird, I know. I decided to get it in my younger years because my monthly premium is drastically lower than if I purchase it in my 50s, which is when most people sign up for it.
I do have some concerns. What if I end up not ever needing it?
I did the math, and I pay $25 every month, which adds up to $300 a year. And while $25 a month isn’t terribly high, it’s more than what I pay for my renter’s insurance and music streaming service combined.
If I continue to pay into my policy for 30 years and on into my 50s, I will have invested about $9,000. And if I keep paying for my LTC insurance until my late 60s? I’ll have paid about $12,000. It’s not chump change, but if I do need to tap into my insurance, just after a few months my plan will have paid for itself. And if I don’t? Well, that’s money I’ll just have to be comfortable with wagering.
Maybe getting LTC insurance seemed important to me because I grew up in a family that openly talked about aging and death. One of my mom’s favorite things to say is “Nothing lasts forever,” when referring to anything from houseplants to relationships.
Since my mom works as a nurse in a long-term care facility, I’ve witnessed firsthand what life can be like when you’re in a state of convalescence: bedridden, the dull hum of daily life segmented by rounds of medication, games in the activities room, and scheduled meals. Seeing the day-to-day life of the residents made me think about what kind of living situation I would want if I were sick for a long time.
Ideally, after I pass, I would prefer any money that remains in my savings account go to my surviving loved ones or a charity of my choice. The thought of the money I had socked away in my savings and retirement accounts engulfed by the excessive costs of nursing home care is unsettling.
After giving it some more consideration, I decided to opt back into my plan. I’m acutely aware that it’s debatable whether the cost of long-term care insurance is worth it, and that there may be better options out there, but I’ll stick with it for now.
Will I one day wish I had spent the cumulative amount I put into my policy on a down payment for a car, or maybe a few nice vacations? It’s entirely possible, and only time will tell.
Jackie Lam is the creator of Cheapsters,
where she helps freelancers get by in the gig economy.
She lives in L.A., where she is on the perpetual hunt
for the perfect breakfast burrito.