Many Americans, espe­cially women, are anxious about outliving their money. In a recent poll, 41% of women said their biggest fear was becoming a financial burden to their families1. We are living longer, Medicare and Medicaid have limited benefits at best, and the cost of long term care keeps increasing - by rights you should be concerned.

Myth: Long-term care is for older people, I’ll never need it.

Fact: About 70% of people over age 65 will need some type of long-term care during their lifetime. And long-term care isn’t just for older people: 40% of those receiving long-term care are between the ages of 18 and 642.

Myth: Medicare or Medicaid will pay for my long-term care expenses

Fact: Medicare doesn’t pay for help with daily activities if that’s the only kind of care needed, and it only covers 100 days of skilled care after a hospital stay. Medicaid covers long-term care only after other assets have been depleted.

Myth: I’ll use my sav­ings to pay for long-term care expenses

Fact: In 2008, the national average for one year of nursing home care in a semi-private room was more than $68,000. One year of home care with an aide visiting three times a week costs about $18,000. And long-term care costs will only go up— they’re expected to more than double over the next 30 years3.

If you’re concerned about pro­tecting your assets and maintain­ing your financial independence in your later years, long-term care insurance may be for you.

However, long-term care insurance can be costly. Utilizing a long-term care rider on a life insurance policy can help protect you from potentially devastating long-term care expenses at a frac­tion of the cost you might expect.

Here’s how it works

Some life insurance issuers offer life insurance contracts with a long-term care rider available for an additional charge. If you secure this type of policy, you can pay the premium in a single lump sum or by making peri­odic payments. In any case, the policy provides you with a death benefit that you can also use to pay for long term care related expenses, should you incur them. The amount of death benefit and long-term care allowance is based on your age, gender, and health at the time you buy the policy. The appeal of this combina­tion policy lies in the fact that either you’ll use the policy to pay for long-term care expenses or your beneficiaries will receive the insurance proceeds at your death. In either case, someone will benefit from the premiums you pay.

Q. Is a combination policy right for you?

A. Deciding whether a com­bination policy is right for you depends on a number of factors.

Do you need both types of insurance? How much life and long-term care insurance will you need and how long will you need it? Will the long-term care part of a combination policy provide sufficient coverage? Be sure to compare costs and benefits of combination policies to other forms of life insurance. Depending on your age and health, the cost for the combination life policy may actually be higher than the total pre­miums paid for separate life insurance and long-term care policies, especially if your life insurance need is temporary (such as income replacement during your working years) rather than permanent.

1. Poll by Securian Financial Group
2. LTCI National Advisory Center, 9/08
3. Mature Market Institute, 10/08