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If you're a baby boomer, then your biggest threat to your future financial security may not be the fluctuating stock market. It may not be the solvency of Social Security, either. So, what then is this danger? It's the high cost of long-term care. And if you don't plan for these services well before you need them, you could be jeopardizing your financial independence during your retirement years.

Of course, you may never have to stay in a nursing home, or require home health care services. But you can't afford to ignore the possibility of needing long-term care - especially when you consider these facts:

• The average cost for a year's stay in a nursing home is $50,000 per year, according to the Health Insurance Association of America - and it can reach twice that amount in some major metropolitan areas.

• Over the past several years, nursing home costs have been rising five percent or more per year, according to the American Council of Life Insurers.

• One out of every three men who live beyond 65 will require nursing-home care, while one out of two women will need these services, according to the American Council of Life Insurers.

These statistics point to one inescapable conclusion: You need to protect yourself from the potentially catastrophic costs of long-term care. If you rack up hundreds of thousands of dollars in nursing home bills, all your financial plans during retirement may go up in smoke. And you could even cause your grown children to assume a burden you'd never want them to have.

What can you do to prevent this from happening? First, you need to be familiar with the funding sources available for long-term care. Many people believe that some federally-sponsored program, such as Medicare or Medicaid, will pay for long-term care costs. But that's just not the case. Medicare only covers a small fraction of long-term care expenses, while Medicaid won't help at all, unless you're willing to "spend down" the vast majority of your financial assets.

In short, when it comes to paying for long-term care, you're going to have to take matters into your own hands. And that's why you should strongly consider purchasing long-term care insurance from a private insurer.

Not all long-term care policies are the same, however. So, before you buy, you'd better shop around. Look for a company that has earned the highest safety ratings from one of the major independent rating agencies, such as A.M. Best Company, Standard & Poor's, Duff & Phelps and Moody's Investors Services. And look for a policy that, at the minimum, has these features:

• Comprehensive coverage - Make sure your policy pays for care in a nursing home, assisted living facility or a private home.

· Inflation protection - As we've seen, nursing home costs are rising sharply. So you'll want a policy that increases its coverage to keep up with inflation.

· Waiver of premium - If your policy has a "waiver of premium," you won't have to pay additional premiums once you start receiving benefits.

Here's one final suggestion for buying a long-term care policy: Don't wait too long. The younger you are when you get your policy, the lower your premiums will be. Long-term care premiums increase particularly sharply between the ages of 60 and 70.

So, act soon. You may never need to take your long-term care policy out of your desk drawer - but you'll probably be glad it's there.


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