Long-term care insurance


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.


About Author

Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to fedexperts@federaltimes.com and view his blog at money.federaltimes.com.


  1. The American Association for Long-Term care Insurance had a study done of claimants with 3-year benefit period policies. For 92% the coverage was sufficient (8% exhausted their benefit). For a couple, having the shared care option allows either spouse to tap the other’s benefit pool — something well worth looking in to when you compare coverages.

  2. There’s a new type of long-term care policy that can protect your assets from Medicaid even after the policy runs out of benefits. These government-approved policies are like a traditional long-term care policy with additional consumer protection features.

    The Long-Term Care Partnership programs provide dollar-for-dollar asset protection. Each dollar that your partnership policy pays out in benefits entitles you to keep a dollar of your assets if you ever need to apply for Medicaid services.

    Here’s an explanation of how these policies work:



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