Long Term Insurance

Buy long-term care insurance. A long-term care policy pays a specified daily amount for nursing home care for a specified number of years or for the policyholder’s lifetime. It typically covers care in other settings as well, such as the home or an assisted living facility.

Many long term care insurance policies have limits on how long or how much they will pay. Some policies will pay the costs of your long term care for two to five years, while other insurance companies offer policies that will pay your long term care costs for as long as you live—no matter how much it costs. But there are very few that have no such limits.

Many experts are lukewarm about such insurance. The policies are complicated, the language is often confusing, and the Oracle itself would be baffled by the significant decisions that must be made. Take timing. Is it better to buy at a younger age, when premiums are cheaper, recognizing that you’ll likely write premium checks for decades before you need to tap the coverage—if you ever do? Or is it wiser to wait and buy when coverage is more expensive but you’re closer to when you’ll need it? A policy that pays out $100 a day for three years would cost an average 55-year-old $709 in annual premiums, according to the American Association for Long-Term Care Insurance. That same policy would cost a typical 65-year-old $1,342. If your family is stocked with hale and hearty 85-year-old marathoners, you may want to delay. On the other hand, if cancer runs in your family, you might want to consider buying on the earlier side. And although three years of coverage may be enough for an average long-term stay, are you willing to risk the possibility that you’ll need five or 10 years?