Dear Savvy Living,

Is long-term care insurance worth the cost? My wife and I have some assets we'd like to protect but we don't want to go broke doing it. What can you tell me?


Dear Louie,

There's no doubt that long-term care (LTC) insurance is expensive and risky, but depending on your assets and health history, it's something you may want to consider.

Who Should Buy?

With the rising cost of nursing home care now averaging more than $77,000 a year for a private room, LTC insurance (see www.longtermcare.gov) that covers nursing home care, assisted living and in-home care can be a good option for many people. But is it right for you? Here are some key points to help you decide:

• Your finances: LTC insurance makes the most sense for those who can afford the monthly premiums, with assets of at least $150,000 - not including the car and house. People who can't afford it, or who don't have many assets to protect can fall back on Medicaid. Remember that Medicare and Medicare supplemental (Medigap) policies do not pay LTC expenses.


• Your health: In most cases it's disease (like Alzheimer's and stroke), not old age, that puts people in nursing homes. What's your family history of these?


• Your risks: About 70% of all Americans over age 65 will need some type of LTC at some point in their lives and women are at a higher risk than men because they tend to live longer.

Cost Effective

If you're leaning towards buying a LTC policy, be sure to do your homework first. The cost of premiums depends on the insurer, as well as the policy's provisions. Here are some different areas that impact your costs and some tips to help you choose the right policy:

• Age: You can reduce your premiums by buying at a younger age. For example, a LTC policy that costs a 55-year-old $1,200 a year in premiums, could cost a 65-year-old around $2,400. Typically, you can't get a LTC policy after age 79.


• Daily benefit: You can get a policy that pays $100, $150, $200 per day or more - but the higher the benefit, the higher your premium. To figure out how much coverage you need, check out the nursing home prices in your preferred area. Then figure out how much of the bill you could shoulder yourself and choose a benefit that makes up the difference.


• Length of benefit: You can buy policies that will pay for one year three years, or as long as you need them - but the longer the benefit, the more you pay. With the average nursing home stay of about two and a half years, a three-year benefit period is probably adequate, unless Alzheimer's runs in your family. Then you may want more.


• Waiting period: Most policies have waiting periods (30, 60, 90 days or more) that require you to pay out-of-pocket before the policy kicks in. The longer you wait the lower your premium, but extending the waiting period means you'll have to pay the bill on your own for a longer time.


• Health: If you're in good health, you can get a discount. If not, you may not be able to get long-term care insurance at all. Also, some policies offer couple's discounts.


• Inflation protection: Many policies have 5% per year inflation protection built in to keep up with rising LTC costs but these policies cost about twice as much as ones without it. Policies that offer inflation protection linked to the consumer price index are about 20 to 40% cheaper.

Policy Shopping

Be sure to choose a flexible policy that covers all kinds of care (in-home, assisted living, nursing home, etc.). It's also wise to go with a company that has sold LTC insurance for years. To compare policies, a good resource is Long-Term Care Quote (800-587-3279). Or work with a LTC insurance specialist who works with a variety of companies. See www.aaltci.org to find one in your area.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Senior" book. The articles are offered as a helpful and informative service to our friends and may not always reflect this organization's official position on some topics. Jim invites you to send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070.