The idea of planning for the golden years is fine with most people so long as they are putting money into retirement vehicles like IRAs. What is more difficult is to face up to the idea that they might be looking at a period where they need to enter into a nursing home. The costs can be extreme, which raises the question of whether buying long term care insurance makes sense.

Ready to be shocked? A study by AM Best Company found that approximately 1 out of every two people over the age of 65 will spend time in a nursing home. That is a huge number. Now consider the costs associated with such care. The fees can easily run in the $50,000 to $100,000 a year range. Do you have that kind of money on hand? How quickly would your retirement savings be exhausted in such a scenario? Few of us could handle the cost easily.

Long term care insurance is designed to do pretty much what the name suggests. The policy should cover your care costs as you grow into your golden years. There are a couple of things to look for with these policies. You want a guaranteed life policy. The last thing you need is the insurance company canceling you at some point. Second, you want to look for a qualified policy. There are non-qualified policies, which raise questions about whether the IRS might every try to claim the benefits paid are taxable to you. With a qualified plan, you never have the problem. Finally, you want to make sure there is a cost of living adjustment in the policy. As time passes, prices go up. You want to make sure the policy is still paying out enough 15 years from now to cover your costs.

Perhaps the most important step is to check the rating of the insurance company you are considering buying from. Why? Well, this policy purchase is much like buying life insurance. It is only as good as the company behind it. If the insurance company disappears in 5 years, you are out of luck. That is the last thing you want to have happen.

Long term care insurance might just seem like another insurance product someone is trying to sell you. Well, it is, but is also one of the most important ones if you want to make sure you end up in a nice nursing home versus some on the other extreme.