An estate plan can end up of little value if the cost of a nursing home wipes out savings and insufficient assets leave heirs without an inheritance. End-of-life medical care insurance can be a welcome addition to off-set the problem.
Long term care insurance policies are a popular and effective solution. However, more than a third of the people who purchase long term care policies let them lapse before they need them to pay for nursing home expenses.
Most of the time people do not intentionally let the policies lapse. Instead, they simply forget to pay the premiums.
This may not happen out of ordinary forgetfulness but rather because as we age we often start to suffer from cognitive impairments.
Unfortunately, the people who suffer from the cognitive impairments that would make them forget to pay the insurance premiums are the very same people who are most likely to need long term care in a nursing home.
Next Avenue reported on this problem in "How Long-Term Care Insurance Policies Backfire."
The article does point out a potential solution to this problem. It is possible to have the insurance policy statements sent to a trusted third party who can make sure that the premiums are paid.
The time to set up a strategy to prevent the lapses is when the policy is purchased rather than later and risk falling victim to forgetfulness.
Reference: Next Avenue (Nov. 6, 2015) "How Long-Term Care Insurance Policies Backfire."