Many investors who evaluate whether to buy a long-term care policy conclude that they can save enough money on their own to afford a nursing home, an assisted living facility, or a live-in aide. Here’s why we believe self-insuring can be a mistake.
Self-insuring for potential long-term care expenses may seem like the easy solution, but it may actually be the most costly. Many people think, “If I need long-term care, I can simply liquidate assets.” But liquidating assets is rarely realistic. Consider the reality of selling assets or liquidating accounts to pay for long-term care expenses. What about the impact of potential market losses on your investments? What about the tax implications? Imagine trying to sell a vacation home to finance this cost. Could you get the fair market price of the property in a short period of time? Most important to consider, however, is the fact that your assets drive your retirement income. How will dipping into these investments affect your or your spouse’s cash flow?
For many Americans, long-term care expenses are inevitable. As the cost of medical care rises at accelerated rates, it is often a prudent decision to purchase long-term care insurance. Trying to self-insure may deprive your heirs, your family, and, most important, you. For peace of mind, we recommend long-term care insurance.
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