As you make your way through retirement in fairly good health, you may consider the wisdom of maintaining your long-term care policy, especially if your savings are running low. Will you really need the policy?
It's understandable why you'd want to drop a long-term care policy you don't think you'll use, but before doing so, there are a few things you may want to consider.
You're healthy now-but that could change. If you live alone and away from family, you may need a home health aide, and that typically costs more than insurance premiums: For in-home assistance from Medicare Certified Home Health Aide, the national average cost is $46.22 per hour, or $46,220 per year for just 20 hours of assistance a week.
Medicaid may not help you. Medicaid could cover some of your long-term-care costs, should you need it. But it has some drawbacks. For example, few Medicaid programs pay for assisted living or home health care, which many people prefer to nursing homes. And to qualify, you generally must use up all but a few thousand dollars in your savings.
It will be hard and expensive to change your mind. If you drop your policy and later change your mind, you will have to pay more for a new policy that is comparable (if you qualify). The higher premium may be due to your health changing or at minimum, simply because you will be older.
A better option may be a reverse mortgage, which lets homeowners who are 62 or older borrow against their home equity. You could use the proceeds to keep paying your insurance premiums, or to create a nest egg to pay for home health care. A couple of caveats, however: First, the closing costs on reverse mortgages can be expensive. And second, if there's a chance you might move to an assisted living facility (as opposed to staying in your own home), you may want to stay with long-term care insurance-because if you live away from home for 12 months in a row, you have to repay the reverse mortgage, which probably means selling your house.