Celebrity and unlicensed financial advisor, Dave Ramsey, freely gives advice on when to buy long-term care insurance (LTCi) and he is wrong! For about 20 years, my colleagues and I have emailed, written, and called to offer him correct advice on when to buy LTCi. I’m still waiting for his reply.
Dave does not have an insurance license. He let his license lapse in 1996. Clearly, he does not have current knowledge of the LTCi marketplace. This does not stop him from giving advice on it. Worse, this does not stop many listeners from taking his erroneous advice!
Dave’s Advice on Long-term Care Insurance (so wrong!)
TheHere’s Dave’s advice on long-term care insurance: https://www.daveramsey.com/blog/long-term-care-why-age-60. He is a staunch LTCi advocate, but on his terms (he’s the expert, right?). Weirdly, he doesn’t think we need to plan for unexpected emergencies happening before we’re 60 years old. He recommends waiting until age 60 to buy LTCi. I guess he believes nothing adverse will happen to listeners’ health before then. There are additional flaws in his simplistic thinking. Dave admits and does a good job of explaining why people save money by buying LTCi at much younger ages; how puzzling!
I have new clients who recently attended Dave’s Financial Peace University. They are 56 and 61 years old. Based on Dave’s advice, they wanted to postpone applying for LTCi until Mrs. was 60. I offered them correct information on why this is a bad idea. Armed with more accurate information, they went forward with their applications.
The High Cost of Waiting
Mrs. was declined long-term care insurance coverage because of a notation that was recently made to her medical records. She would be completely covered today if only she had applied for coverage 2 years earlier.
The LTCi company approved Mr’s. application, although his premiums are higher than than we expected. This is because after a lifetime of very stable, low prostate levels, his prostate levels have recently climbed. The LTCi carrier spotted this, even though the levels are still well within the normal range. He missed receiving Preferred Rate status by only one year.
The correct age to buy LTCi is age 50 or younger, if at all possible. Once an applicant crosses the 60 years threshold, rates immediately increase, regardless of their health.
For many years, Suze Orman, another unlicensed, beloved celebrity financial pundit, proffered incorrect advice on when to buy LTCi. But she learned firsthand why waiting until age 60 is wrong. See http://www.njltc.com/docs/Suze_Orman.pdf for her retraction of that advice.
The moral of this story is: Do not depend on the advice of popular celebrities!
If you want to take personal responsibility for your long-term care planning and make a confident, well-informed decision on the best plan of action, seek the advice of an experienced, ethical LTCi specialist. The best time to buy LTCi is in your 40’s or 50’s, but we’ll still find affordable rates for you in your 60’s.