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Think twice before taking  the very poor advice to invest the premium instead of purchasing long-term care  insurance as suggested in "Stocks vs. Insurance" (August). The author recommends  investing the premium vs. purchasing LTC insurance because the odds of needing  nursing home care are so small:

" . . . three out of four people age 65 will either never enter a nursing home or will stay in one for fewer than three months. Only one in four patients who actually moves into a  nursing home lingers there for more than a year, and fewer than one in 10 stay  for five years . . . but if your family and friends can care for you at home,  you're less likely to need it."

REALITY: The odds of needing nursing home care are largely irrelevant since nursing home care is less than 15% of total long-term care. Most of it is home health care, which at an average of $15/hr. costs just as much or more than nursing home care for a  meaningful 10-12 hour shift. The odds of needing either nursing home or home  care are greater than 50% (Health Insurance Association of America, 1995). Also, the statistics used for nursing home utilization were published in 1991. The 1995 national nursing home survey showed that the average length of stay was 2.3 years and 15% of patients stayed longer than five years. A 1999 AARP survey reports the average home care stay to be 4.5 years.

And can your family or friends care for you at home? Think about what goes into that. Even if your spouse or other caregiver doesn't work outside the home, that person has to sleep.

REALITY: A long-term care policy may be the only thing that keeps you out of a nursing home by  giving your caregiver enough rest to take care of you at home with perhaps a  10-12 hour shift of home health care.

The worst part - the author projects savings of $81,863 after investing annual premium for a  50-year-old of $802 for 30 years, sufficient to cover more than a year of long-term care at today's average of $50,000 a year.

REALITY: Using a conservative growth rate of 5.8% from both the General Accounting Office and the  Health Care Financing Administration, one year of care in 30 years will cost  $250,000! And much higher in "high cost" parts of the country such as New York,  Massachusetts, Connecticut and parts of California. Plus, that's just for one person, so the idea of saving vs. purchasing insurance really bites the  dust.

Phyllis Shelton  is President of LTC Consultants, a Nashville, Tennessee based firm that provides live and correspondence training with continuing education credits and  marketing and sales aids to the insurance industry. Call 1-800-844-4893 for her 2000 training schedule, a free materials catalogue, and  information on private training classes.

1999 Shelton Marketing  Systems, Inc.

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