Published: Friday, 15 May 2009 | 12:08 PM ET

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By: Bill Losey
On the Money Contributor

Question: My husband and I are both in our mid-50s and we’ve started hearing a lot about long term care insurance. Does it make sense for us to buy this type of coverage or should we just put aside some money to cover that potential expense? -Deb, NY

Answer: Deb, what I’ve found is that people, especially retirees and pre-retirees, hang on to old insurance policies they no longer need. In doing so, they needlessly pay premiums that cut into their retirement spending, and often times they short change themselves on coverage they really do need like long-term care insurance (LTCi).

Here are the top three reasons why some, not all, of my private clients purchase long-term care insurance:

First, they want to protect a healthy spouse from experiencing a loss of financial security and/or a decrease in their standard of living. Secondly, they want to protect their family members from having to act as caregivers and potentially jeopardize their own financial security. Finally, they want to maintain their financial independence, dignity and their decision-making authority.

If you are discerning like my private clients, you recognize that you’ll probably live many more decades, you’ll probably have a medical issue during your lifetime that will require care, you understand that the cost of medical care is going to be significantly higher than it is today, and spending down your assets and becoming a ward of your state Medicaid program is not a viable option. For most people the out of pocket costs for care and the nest egg necessary to cover the potential expense are prohibitive. If you recognize all that, then I think you should investigate LTCi further.

Bill’s Bottom Line: As a courtesy to my CNBC readers I have prepared a FREE 29-page report for you to download on this topic. Click here to read it [pdf].

Bill Losey, CFP®, CSA, America's Retirement Strategist®, is the resident retirement planning expert for On the Money. He has been named one of America’s Top Financial Planners and is the author of Retire in a Weekend!. The Baby Boomer’s Guide to Making Work Optional. He also publishes Retirement Intelligence, a free weekly award-winning newsletter. Bill can be reached online at MyRetirementSuccess.com.

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