Mother is elderly; does she need long-term care insurance?

Written by Dave Ramsey on . Posted in Finance

davernewDear Dave,

I'm trying to help my elderly mom with her finances. She has no debt and more than $1 million in assets. There was also another $500,000 trust left for her by my dad. With access to all this, does she still need long-term health insurance?

Anonymous

Dear Anonymous,

Absolutely! She also needs an estate planner immediately. Your parents were far too wise with their money to have your mom end up in a bad situation toward the end of her life. You need to do everything you can to prevent this from happening.

In the event she's unable to take care of herself, long-term care health coverage to take care of nursing home or in-home care is an absolute necessity. The cost of nursing home care can run from $75,000 to $100,000 a year. Your mom is in great shape financially. But just imagine what a prolonged nursing home stay could do to her nest egg. It's not a pretty thought.

When you hit 60, you need long-term care insurance, period. Whether you have $1 million-plus in the bank or not, I strongly recommend it as a wise part of any asset management plan.

Dave

What is a money market account?

Dear Dave,

What exactly is a money market account?

Julie

Dear Julie,

Money markets are short-term financial instruments. Money market accounts pay about the same, maybe a little bit more, than traditional savings accounts. If you get a money market account with a bank, you've basically got a savings account that mirrors — or pays about the same — as the actual money markets.

Now, if you get a money market account with a mutual fund company, you're actually buying into the money markets. The big difference is that the mutual fund companies are a lot more flexible, and they don't have FDIC (Federal Deposit Insurance Corporation) insurance.

I have my emergency fund parked in a mutual fund company money market account, and the great thing is that it's fully liquid — meaning there are no penalties to take cash out at any time. It's a perfect place to keep an emergency fund!

Dave
Author Information
Dave Ramsey
About:
David L. "Dave" Ramsey III (born September 3, 1960) is an American financial author, radio host, television personality, and motivational speaker. His show and writings strongly focus on encouraging people to get out of debt.

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