Providing Long-Term Care for You and Your Savings

When you were a child, your parents probably taught you about saving up for a rainy day. But with the high cost of health care these days, you could find yourself needing to save for more rain than you bargained for.

That's where long-term care insurance comes in. It can help protect all that you've worked and saved for over the years by preventing you from having to sell off your assets in case you, or a loved one, has extended health problems. And there are approximately 10 million Americans who require long-term care, according to a Georgetown University report.

In a nutshell, long-term care insurance includes coverage for a range of services including medical services, personal care and social and supportive services provided by nonskilled medical staff in a variety of settings. Long-term care does not only take place in a nursing home. Other options include:

• Limited in-home services, including housekeeping, cooking and serving meals


• Nursing and therapeutic services provided in the home or other center, including physical therapy, speech therapy, and injections


• Personal assistance with everyday life either in your home or in a residential setting where you can live independently with some oversight.

You may think you've saved enough, but consider that in 2005, $206.6 billion was spent on long-term care in the U.S., $37.4 billion of which came out of people's pockets, according to the report. And in 2006, the average cost for a private room in a nursing home was almost $71,000 per year.

Without long-term care insurance, much of this needed care and the associated costs will become an uninsured private responsibility falling to you and/or your family.

Coverage of a long-term care policy kicks in if you're unable to perform at least two activities of daily living without substantial assistance from another person. These activities generally include bathing, dressing, eating, using the toilet and moving from place to place. Coverage also kicks in if you're experiencing severe cognitive impairment. A physician may need to certify that you need care for at least 90 days.

If you are weighing this insurance as an option for yourself, let me forewarn you: These policies aren't easy to understand. There are a lot of components to a policy, and policies vary in structure from one insurer to another.

You will need a really sharp insurance agent that works with these policies to educate you and help you make a decision. Another thing you want to keep in mind is the financial strength of the insurer. What good is a policy if the insurer is not around to pay claims?

Some of the largest providers of long-term care insurance include Genworth Financial (ticker - GNW), Manulife Financial (ticker-MFC) subsidiary John Hancock and Metropolitan Life Insurance (ticker- MET). TheStreet.com Ratings staff analyzes insurers for their financial strength based on capitalization, profitability, liquidity, stability and investment safety and assigns ratings of A(Excellent) to E(Very Weak) to each company. Be sure to check out the rating assigned to any carrier you select - financial strength is one of several factors you should take into account before purchasing a policy. You can find the ratings of any insurer on the ratings section of our website.