Issue link: https://viewer.e-digitaledition.com/i/334922
enough assets to pay for even an extended period of care and still leave plenty of assets for the healthy spouse or as a legacy gift. However, I bet many of these same people don't self-insure their homes. Let's assume your home's replacement costs with all its possessions and belongings is $500,000. This figure is equal to the cost of a three- to four-year stay in a full-care nursing home in Upstate New York. Most people would purchase homeowner's insur- ance equal to the replacement cost of their home and contents, even though they could afford to self-insure their home. You choose to purchase insurance because you feel the security of transferring the risk to the insurance company is worth the premium you pay for the policy. The same logic holds true with long-term care insurance. You purchase the policy with the hope you will never need it, and the cost of the policy is worth the peace of mind that if you do need it, your assets are protected. However, the odds of using your long-term care policy are significantly greater than using your homeowner's policy. On average, if both a husband and a wife each own a long-term care policy, one of them would need to collect on their policy for 15 to 20 months to receive benefits equal to the total premiums paid for both policies over the course of 25 to 30 years. Meaning, one claim that lasts a year and a half pays for the policies. If the length of care is longer, or if both spouses require care, then the policies were a good investment. If the length of care is shorter, or if neither spouse ever has an extended long-term care event, then you would have been better off leaving the premium dollars in investment accounts. This quick mathematical exercise does NOT factor in any potential tax benefits of long-term care insurance premiums. In New York state, there is a 20 percent income tax credit for premiums paid each year on a tax-qualified policy. Also, if you are self-employed, or the owner of an S Corporation, LLC or Partnership, a portion of your premium could be deductible for federal income tax purposes. Beyond the financial and tax benefits of long-term care insurance, there is the emotional side of the discussion that can't be overlooked. Individuals with long-term care insurance believe it will make the decision-making process easier for their family members. It can remove or partially remove the financial concerns about paying for "mom's or dad's" care. Instead of focus- ing on the cost, family members can work together to decide upon the best path of care. As with life and disability insurance, you need to be insurable at the time of purchase. The cost of long-term care insurance is based on age and becomes exponentially more expensive the longer you wait to purchase it. For these reasons, it is recommended you investigate this type of insurance well before you turn 60. In fact, the average age of someone buying long-term care insurance is in their mid to late 40s. Also, remember that long-term care events can happen to anyone at anytime — accidents and illnesses don't discriminate. Peter L. Derrenbacker, CLU, ChFC, CFP, is a licensed insurance broker. His insurance prac- tice, Derrenbacker Group Benefit Specialists LLC, specializes in group benefit design and service for medical and professional groups. He can be reached at 315-437-7677 or pder- renbacker@derrenbackergroupbenefits.com. ■