I often speak with consumers who have a net worth of 2 million dollars or more and who assume that their decision to self-insure is the smart one. Of course, everyone has to determine what the best course of economic action will be for their own future, but some are raising questions about whether it might make better sense for even affluent individuals to purchase long-term care insurance as well.

Here is an article that raises some interesting points to consider:

“Surprising economic times can reveal fault lines in previously solid assumptions. The conventional wisdom was that the wealthy would pay for long-term nursing care out-of-pocket and middle-class and upper-middle-class Americans should buy long-term-care (LTC) insurance. Advisors assumed that affluent clients would have the income stream to cover skilled staff for in-home care or full facility care regardless of the length of convalescing, if necessary.

In fact, wealthy Americans with a very comfortable standard of living and adequate resources to cushion from portfolio shrinkage have expressed concern about the expense of healthcare in the future. In a 2008 survey by Northern Trust, the cost of health care came in second after inflation eroding income as the chief concern of Americans with a minimum net worth of $1 million (not including primary residence). The truth is that more people need to consider those costs. Those who reach age 65 will have about a 40% chance of entering a nursing home, according to the U.S. Department of Health and Human Services. For those who do enter a nursing home, about 10% will stay there five or more years—a long time to be paying for nursing care out of pocket.

Moreover, even the published averages of nursing care and in-home care can be misleading when you consider the likely high service expectations of wealthy families. Average rates buy you rooms in facilities that your affluent client may perceive as more Motel 6 than the Four Seasons. For a high-end care facility such as one in Boston associated in with Harvard Medical School with its own hospital on the grounds and highly trained staff, the yearly costs are well over $100,000, or more than $270 per day. In New York, however, $398/day is just the average cost, according to the 2008 Cost of Care Survey from Genworth Financial. According to the survey, the five-year annual increase in the average cost of private or semi-private room in a nursing home is 4%.”

You can read the rest of the article here.