Long-Term Care Insurance and Your Personal Tolerance for Risk

Your personal tolerance for risk is an important psychological consideration when determining whether or not to purchase LTC insurance.  Some people have a tolerance for financial risk, while others believe in a conservative approach and would prefer to transfer the risk to an insurance company.

People who have covered their other high-priority risks with insurance usually have a low tolerance for the financial risk of long-term care. Their philosophy is to maintain as much financial control as possible and to plan ahead for long-term care insurance.

To help you better understand your personal tolerance for risk, ask yourself these questions:

• Have I consistently insured my family and myself for the proper types and amounts of insurance coverage, such as health, disability, and life insurance?
• If I have, do I tend to transfer the entire risk to the insurance company, or am I comfortable taking on some of the risk myself? In other words, should I consider coinsuring the long-term care risk?