Myth: I can "self-insure" for long term care should I need it down the road.
Reality: There is no thing such as "self-insurance", only "self-funded" care.
Perhaps you've heard this very myth repeated from a family member or friend. Maybe you've even heard yourself say it aloud to others. However, insurance is fundamentally different from self-funded care because it acts as a form of risk management. Should you eventually need long term care, then you would on average pay much less for the total cost of all of your premiums than you would for the total out-of-pocket cost of long term care expenses. You would therefore take on all of the risk personally, instead of allowing the insurance company to take on some in exchange for monthly premium payments. This is the advantage of having insurance over self-funding.
If you find yourself very fortunate to already have liquid assets saved away to cover the entirety of potentially long-term, very expensive, complex care, that is one thing. But with the median annual cost in 2019 of a private room in a nursing home in the United States running at $102,200, an assisted living facility falling at $48,612, and a home health aide costing you $52,624 according to Genworth's Cost of Care survey, just be prepared for the realities of the exponentially high cost of self-funding before you decide that is the way to go.
Of course everyone hopes they will never actually need it, but long term care insurance provides that peace of mind that if you should, it will be there for you.
According to a study completed by Mutual of Omaha, the top five reasons people say that they purchase long term care insurance are:
- "To protect my assets."
- "Security/peace of mind."
- "To cover the cost of LTC services I might need in the future."
- "I don't want to be a financial burden to my family."
- "I know I'll need it."
Do any of these ring a bell? If so, it might just be worth investigating.
Long-term care coverage can also help with coordinating the care, providing support in making difficult decisions, giving assistance with deciding if other assets need to be used in conjunction with insurance, and if so, deciding what those would be. The bottom line is that long term care insurance can help take some of the pressure off of you and your family in a multitude of ways. Can you say that self-funding would do the same?
Keep in mind, a long term care policy can be designed to cover only a portion of the care, to be used in conjunction with your own funds, if that is preferable. There are many different policies that can be customized to your individual needs. After all, some coverage is better than no coverage!
Remember, there is no way to "self-insure", only to completely "self-fund" your care. At Baygroup Insurance, we're here to answer any questions you may have about this. Feel free to contact us at
or call us at 410-557-7907 for more guidance and education. Don't be afraid to reach out- there is no obligation, only support.
Melissa Barnickel is a CPA, a CLTC, (Certified in Long Term Care), and a licensed insurance broker specializing in
Long Term Care Insurance (LTCi). Over the past 40 years she has worked for KPMG as an auditor and consultant and held significant financial positions such as Controller, Vice President of Finance and Leader of LTC Sales for two different insurance brokerages. She has worked in the LTCi industry for 25 years.
Hearts & Minds: Understanding Why People Buy Long-Term Care Insurance. Mutual of Omaha. 29 Feb 2020.
Cost of Care Survey 2019. Genworth. 29 Feb 2020.