Dave Says: Can I Self-Insure Long Term?

Dear Dave,

I just turned 57 and have been researching long-term care policies. Is there a point where you can self-insure for long-term care needs without a policy?

Peter

Dear Peter,

Mathematically, I'd say you could safely self-insure if you have the resources available to support your care in a nursing home or other facility for 25 years. Of course, if you're married you have to think about your spouse and make sure she has enough to live on comfortably at the same time. That's a lot of money. In my mind, it's a large enough bill that it makes sense to transfer the risk to a long-term care insurance policy.

The simple truth is most people won't have enough money to self-insure for that kind of thing when the time comes. If you have $20 million liquid sitting around, then you could easily set aside $2 to $3 million for long-term care and still be in great shape. But I advise virtually everyone to have good, long-term care coverage in place by age 60. For many folks, it can make the difference between living with dignity and having to depend on the government. And that's not something I ever want to do for anything—especially not my healthcare!

—Dave