Studies of demographic data show that 30 to 50 percent of Americans who make it to age 65 will eventually need to be cared for in an Assisted Living Facility. These same studies demonstrate that almost 50% of women in the U.S. will require this type of care.

When planning for retirement, most of us think about where we want to live, how much we want to travel, how we want to spend our days, and how we’re going to pay for it all - but far too many of us fail to consider the costs associated with changes in our health.

The problem isn’t in becoming sick and dying, the financial risk stems from surviving an illness and then requiring long-term care. Women are more likely to experience the latter scenario, so it is imperative that you plan for this possibility, so you don’t deplete your retirement savings or greatly reduce the value of your estate.

In some parts of the country, a private room in an Assisted Living Facility can cost as much as $100,000 per year and Medicare, generally, does not cover this expense!

One smart option is to buy insurance to cover the cost of long-term care. Unfortunately, research shows that people tend to make insurance decisions that are not in their best interest. The decisions not to buy long-term care insurance is a prime example of this.

Most people have fire insurance because their mortgage requires it. Many of us retain the coverage after the mortgage is paid off because we’ve grown accustomed to the peace of mind that comes from knowing that we’re protected from catastrophic financial loss in the very unlikely event of a home fire.

Insurance decisions should weigh your perception of risk against your risk tolerance.

The primary goal of long-term care coverage is to reduce your financial risk. If you purchase more insurance than you need, the increased cost of the premiums could end up defeating your financial purpose.

This same concept applies to other types of insurance. If you have a very low deductible on your car insurance, your premiums will be much higher. A higher deductible makes financial sense because it greatly reduces the reoccurring cost of the insurance.

Even in states where car insurance is not required by law, most people understand the need to pay insurance premiums to avoid the financial hardship that could be caused by an accident or lawsuit. People pay auto insurance companies to assume risk on their behalf, but when it comes to long-term care they think - “What if I don’t need it?”

The whole point of insurance is to protect yourself from risk, not certainty.

Some people decide against buying long-term care insurance because they believe they have other options. One common assumption is that a son or daughter will care for them, but that may not be possible – especially, if they have to work to ensure their own financial security. Others plan to sell their home, but this is not a good risk-management strategy. Long-term care insurance is meant to protect assets like your home.

In some states, regulators have approved policies that would allow long-term care insurance providers to charge women as much as 50% more than men!

The justification for the discrepancy is that women are more likely to need this type of care so - expected premium increase for women to surface in other states. One way for women contemplating this kind of insurance to save money is by accelerating their purchase thereby locking in premiums before they rise in their state.

When assessing long-term care policies, both men and women should consider the following points:

• Don’t buy more insurance than you need. Brokers will try to sell you a policy with no “elimination period”, the initial period of care that you pay for yourself. This would be like buying an auto policy with no deductible. Choosing an elimination period of 90 to 180 days will greatly reduce your premiums.
• You don’t need a policy that will cover $100,000 a year. You need a policy that will cover much of your risk, covering all of your risk increases the premiums. Another reason not to overbuy is that you may choose to retire to a less expensive part of the country.
• The average long-term care stay is 2.5 to 3 years. One reason to consider insuring for a longer period is that Alzheimer’s patients typically require care for longer periods.
• You can’t buy long-term care insurance directly. Choose a broker who represents various insurance companies so they’re not intent on selling you one of just a few possibly substandard products in their arsenal.
• Beware of bundling. In order to assuage the irrational belief that long-term care insurance is a waste of money because you may not use it. Products that combine long-term care insurance with life insurance have emerged. Two common problems with these bundles are: 1) you may already have enough life insurance and 2) even if you don’t, you can probably get a better price if you break out the policies and shop them separately.
• Delaying the purchase can cost you. The younger you are at the time of purchase, the lower your premiums will be.

Given that the odds of requiring long-term care are so great and the consequences of not protecting your assets are so dire, the decision to purchase this type of coverage should be a no brainer – especially, for women.