Senior couple looking at house © Andy Dean Photography/Shutterstock.com

Dear Insurance Adviser,

My husband and I are both 66, we have no kids or heirs, and we’re both retired. Our net worth, including equity in our house, is close to $3 million. We are in a quandary about what type of long-term care insurance to purchase. We have spoken to a few brokers and have done a lot of reading but are now in “analysis paralysis.” There are so many options and loads of fine-print restrictions.

We assume that at least one of us will require long-term care but don’t like the fact that all those premium payments are lost if we don’t have to utilize the services. We don’t want to be in a situation where we pay into a product and then are faced with significant premium hikes that force us to drop out. How do we select the right policy or approach?

— Maureen

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Dear Maureen,

The bottom line is to choose a broker that you feel most comfortable with and let him or her walk you through the decisions. Forget all the spreadsheets and the “analysis paralysis.”

I have one question for you: With $3 million in assets and no children or heirs, what are your goals for buying long-term care insurance? Let’s assume that the average cost in a nursing home is $90,000 per year. Assisted living and home health care usually cost less. So, if you don’t have any long-term care insurance, your assets may be depleted by $90,000 annually, less any gains in investment income, plus any inflationary increases in nursing home costs.

The point I’m making is that I don’t see much of a chance of you running out of funds for long-term care costs.

Here is my recommendation: Think hard about your long-term care insurance needs. If you decide you do need it, buy a policy that intentionally covers only part of the risk, so that you would pay any difference yourselves.

Settle on a premium payment that is very modest and easily affordable. That way, when rates do increase, the premium will still be affordable, so you won’t be tempted to drop the policy and lose all your payments. Don’t worry too much about future rate increases. Insurance companies will give you options to reduce your coverage without increasing the premium, when the time comes.

Here’s what a modest program might look like for you: A benefit of $3,000 per month with a 3 percent cost-of-living benefit increase; care anywhere — even at home; six to 10 years of shared coverage for the two of you; and a 90-day deductible (waiting period).

Good luck!

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