Coffee With Mike- Long Term Care Insurance Pt. 1

The Federal Long Term Care Insurance Program, (FLTCIP), is a very good program. The unfortunate thing about long term care insurance is: "Man, it's expensive!" It's pretty expensive. At the same time, you hope that when you buy long term care insurance you never have to use it. You hope you'll never lost your mind, for instance, and you end up in a nursing home because you have Alzheimer's, and yet your body physically is doing great. That means you're going a long time without your mind.

I mean no one wants that scenario, so who wants to think about long term care insurance and who wants to buy it? Because, again, it's just expensive. When we think about it as a part of our cash flow, it's extremely expensive- for most people. 

It's something that we don't want to buy, but let's think about what we're really doing with long term care insurance. We're taking a risk of spending a lot of our investment money on a one-time-event, from which we may recover. If we recover from this long term event to independent living, and we have spent a lot of our investment money for that to happen, that's a bad combination. 

When we recognize that maybe if I am trying to protect my investment money from an event like a long term care event, then maybe I let my investment money pay for my long term care insurance. It's not part of my cash flow, it's part of my earnings on my investment. For example: for most people, what we'd spend is maybe one 1% of our total investment principle every year. If we could get just 1% earnings on that principle we could pay for long term care insurance. For some of us it would be less than 1%. For a few of us it would be a little bit more than 1%. Let me just ask a question: does it make sense to you that you would use 1% or so of your investment money to protect the other 99%? 

If it makes sense, then take a look at FLTCIP. If that makes sense then certainly use FLTCIP as the basis to judge any other offer you get from any other provider, because in my opinion, FLTCIP is the place to start. You start there when you ask yourself: 

Does it make sense for me to use 1% of my investment account to protect the other 99% of it from a long term care event, so that I can have the money I need when I have that long term care event, I recover, and I get back to independent living?