More and more Americans recognize the need to save for retirement. But few are aware of the need to protect their savings against the steadily growing costs of long-term care services. Long-term care insurance can cover the costs of long-term care services and protect lifetime savings. It enables you to maintain financial independence and gives you the dignity of choice by covering a wide rage of services in a variety of settings.

High Risk, High Costs

A lifetime of retirement savings can be wiped out by an unexpected need for nursing home, assisted living, or at-home care. This happens more often than anyone expects--one in four Americans ages 65-74 and 62 percent of those over 85 suffer some limitation of activities.

Yet, many people are unable to save enough on their own to cover the costs of long-term care. Today, a one-year stay in a nursing home averages $77,000. By 2030, the same stay is expected to reach $200,000. Home care is less expensive, but still costly: a visit by a home health aid can cost $2,700 a month.

Sources to Pay for Long-term Care

Health insurance seldom pays for long-term care services and the government provides only limited coverage through Medicare and Medicaid: Medicare provides skilled nursing-home care only for a short time following hospitalization and limits help at home to those who need skilled nursing care and rehabilitative therapy; Medicaid is for the poor, however middle-income individuals may qualify for benefits, but only after spending down their savings.

Long-term care insurance, however, pays for skilled care and covers help with activities of daily living--bathing, eating, dressing, using the toilet, or transferring from bed to chair. It is an affordable way to protect against the risk of having to use your savings to pay for long-term care, and covers services in a variety of settings.

Because consumers have demanded greater choice and help in maintaining their quality of life, insurers now offer policies covering services that promote independent living including adult day care,  assisted living, care management, support for caregivers (respite care), home modifications, in addition to institutional care.

Long-term care insurance is sold to individuals or through a group plan offered by an employer. Coverage can be purchased for a period of time, such as one or six years, or for lifetime coverage.