Self-Fund or Co-Insure?

Self-Funding vs. Co-Insuring

The table below, compares the outcomes of self-insuring, by investing $3,000 a year at a 5% compound interest rate, with the value of the “Pool of Money” that would be available to you if you were to allocate the same amount of money to pay long-term care insurance premiums.   Keep in mind, your long-term care self-funding savings account will only grow as illustrated,  if you do not fail to make an annual contribution, and you never dip into the account for any other expenses.

Age        Pool of Money                        Premiums                Growth of Savings

55 $321,2000 $3,000 $3,150
58 $371,829 $12,000 $13,104
61 $430,438 $21,000 $24,627
64 $498,286 $30,000 $37,966
67 $576,829 $39,000 $53,408
70 $667,752 $48,000 $71,284

This example illustrates the amount of leverage a policy can provide to protect your assets against a potentially catastrophic event.  Take for example what the outcome would be if this person purchased a long-term care insurance policy at age 55, and then needed to receive full-time long-term care at age 58.  Their $12,000 in paid premiums would provide them with $371,829 to pay long-term care expenses.  If they had saved $3,000 over those four years, and were able to earn 5% each year on those savings, they would have $13,104 available to pay for long-term care expenses.