Ask an Advisor: We Pay $500 Monthly for Long-Term Care Insurance and Have Paid $72k. Should We Keep It?

Core Insights - The article discusses the increasing premiums of long-term care insurance and the considerations for policyholders regarding whether to continue or cancel their policies as they age [1][2]. Group 1: Premium Increases and Sunk Costs - The individual has experienced three premium increases, now exceeding $500 per month, totaling approximately $72,000 paid in premiums over 25 years [1][3]. - The concept of sunk costs is emphasized, indicating that past premium payments should not influence the decision to keep or cancel the policy [3]. Group 2: Need for Long-Term Care Insurance - The primary consideration is whether the individual still requires long-term care insurance and if the current coverage justifies the premium cost [4][7]. - Statistics indicate that the likelihood of needing long-term care increases with age, with 8% of individuals aged 65-74, 17% aged 75-84, and 42% aged 85 and older expected to require such care [6][9]. Group 3: Financial Resources and Decision Making - The decision to maintain or cancel the policy may depend on the individual's financial resources and retirement goals, including the performance of investments and overall retirement spending [8]. - If the individual's financial situation allows for self-insuring, it may be a viable option, but if not, continuing to pay premiums could be advisable [8].