Q: Can you explain what you meant when you said to buy just enough insurance so that the probability of exhausting the policy benefits is between 10 percent and 20 percent?
A: It is possible, although not necessarily easy, to estimate the probability of spending a given amount of money on long-term care insurance during your lifetime. A long term care insurance policy typically contains a lifetime limit on the amount of money it will pay. The goal is to buy enough insurance to reduce the probability of spending more than the amount of insurance on long term care during your lifetime to an acceptable level. I feel that a probability of something less than 20 percent is acceptable, although you may set the bar anywhere you’d like.