Is Long-Term Care Insurance Worth Buying?

PBS NewsHour business and economics correspondent Paul Solman is now answering questions from Next Avenue visitors about personal finances, business and the economy. His advice will appear on Next Avenue as well as Solman's PBSNewsHour blog, Making Sen$e With Paul Solman, and the Rundown, NewsHour's blog of news and insight. PBS NewsHour is an hour-long television news program and accompanying website with the mission of providing intelligent, balanced and in-depth reporting and analysis of the day's most important domestic and international issues and news events.

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I'm struggling with the question of long-term insurance — I've received a lot of advice, all contradictory. Is it ever a good idea to throw money at an insurance company, with all the attending exemptions and exclusions, that you are not likely to benefit from?  —Suzanne Gore Reynolds

Sometimes. I myself have had a term life insurance policy for many years. So far, the insurance companies have won the bet, praise the Lord. But it bought valuable peace of mind for decades.

When it comes to long-term care insurance, however, I'm wary. As I wrote in May, I have never bought this insurance for my wife or myself.

(MORE: The ABCs of Long-Term Care Insurance)

Here's my reasoning: We're in our late 60s, just a hair ahead of the baby boom. If we live a long time, so will tens of millions of our contemporaries, I'm guessing. If we need long-term care, they probably will, too.

But if insurance companies are flooded with claimants, they figure to be strained to honor their obligations. That suggests, at least to me, that they will be forced to stint on payments and impose all sorts of restrictions. They may even fail to pay entirely.

My choice, then, has been to self-insure. My wife and I have saved since the 1970s for the purpose of financing our old age. And since our four parents lived to an average age of 89 (two of them needed long-term care), we've saved assiduously.

Solman’s Advice on a Long-Term Care Policy

Of course, not everyone is in the same situation. My answer to your question depends on your age and your savings. The older you are, the more long-term care insurance costs — and you may be denied coverage if you're in your 60s or older when you apply. If you have enough in savings, you may be able to self-insure, as I have.

But maybe you're not in that position and want the coverage. If so, here's my advice: Ask your attorney to review the terms of any long-term care policy and the financial health of the insurance company issuing it before you commit to a purchase.

Paul Solman is a member of the Twitterati and can be followed at Twitter@paulsolman. His daily blog can be followed, well, daily at Making Sen$e by linking here, or just Googling the words: "Making Sense."