SHOULD YOU PURCHASE A COST OF LIVING RIDER WITH YOUR LONG -TERM CARE INSURANCE POLICY?

By Louis Jay Ulman, Senior Principal

We had a client visit with us who had just moved her father from another state to be close to her in Maryland.  Dad did not have substantial assets or income and our client was concerned about the cost of his nursing care which was rapidly approaching.  Our client found that Dad had purchased a long-term care insurance policy with a daily benefit of $85.  We informed her that in the county in which she lives, the average nursing home cost today is approximately $260 per day.  We asked to review the policy and noted that Dad had purchased a policy rider which provided for a cost of living increase of 5% per year.  Since the policy was purchased a long time ago, the $85 benefit is now worth almost $230 per day.  With Dad’s other income he can more than cover his cost of care.  In this case Dad’s purchase of the rider was a very wise decision.  When clients do not or are not able to purchase long term care insurance, there may be other ways to protect some assets in the event of a nursing home stay and we are always glad to discuss these options with our clients.