When it comes to knowledge about long term care insurance planning, Americans received a failing grade.
Long-term care poses the single largest risk to Americans living on retirement savings and income according to the American Association for Long-Term Care Insurance, the industry trade group. Yet, few have the facts correct when it comes to understanding available planning options.
As the U.S. population ages, the percentage of people older than 65 will increase from about 13% in 2009 to 20% in 2040. Part of the projected increase is due to an increased life expectancy beyond age 65. After retirement health insurance and Medicare provide very little long-term care benefit, if any, according to financial planning professionals.
The results of a just-released national study of individuals between 40 and 70, most reported knowing what long-term care is and how much it costs. But their scores fall short when it comes to knowing what percentage of people will need long-term care and how they will pay for it.
According to the study conducted by the MetLife Mature Market Institute, just about four in ten adults (36%) know that 60-to-70 percent of 65-year-olds will require long-term care services at some point in their lives. Just over one-third knew that most long-term care services are received at home. While the number of respondents answering correctly (37%) increased since the 2004 survey (18%), awareness is low overall.
Few participants in the survey reported that they are taking action to protect themselves from such potentially catastrophic expenses; only 18% know long-term care insurance rates are based on age, but almost nine in ten (87%) are aware that a comprehensive long-term care policy covers home, assisted living and nursing home care.
The survey also reported that eight in ten respondents (85%) understand that long-term care could have many causes, such as Alzheimer’s disease, an accident or a chronic or disabling condition. More than four in ten (43%) are able to correctly identify the national average monthly cost for assisted living.
Written by Jesse Slome from the American Association for Long Term Care Insurance