As I mentioned on Tuesday, long-term care insurance may not suit everyone. The premiums may be too high or you may not even qualify.

Some critics argue that the 90-day waiting period in most policies, combined with the stat that two-thirds of people who go into nursing homes stay less than 90 days, make it so that most people won’t benefit from these policies.

If for whatever reason a long-term care policy won’t work for you, here are three alternatives that you should consider to meet the possible need for future care.

Invest Your Potential Premiums

Rather than spend your cash on a long-term care policy, you could use the money you would pay in premiums and invest it in a diversified index fund. With a potential 20 plus-year horizon before you would need the money and a conservative return of 4%, you could turn your $3000 a year into $91,000 to use on expenses in case you need it. If you don’t need the money, it’s cash you can pass on to others, rather than just losing the amount you paid.  Invest even more each year and/or start earlier, you could self-insure by having enough savings to meet any need that may arise.

Keep in mind, though, that the average estimated cost of a private nursing home room is $250 a day, which equates to $91,250 a year. Should your stay in a nursing home last longer than a year, that savings won’t get you very far. This point may also be true for those with long-term care policies since most only cover from $120-$180 a day.  

Either way, you will still need to come up with cash and also have the discipline to actually invest the money. Just another incentive to save all that you can.

The Village Movement

I learned about this alternative from the CBS Sunday Morning segment. A new movement is rising where a group of “like-minded seniors” combine their resources to care for each other rather than go into a facility.

Each member pays yearly dues (the featured village had dues of $1000 per year…much cheaper than insurance premiums), which could also be subsidized by donations from the community.  The village, in turn, sponsors community outings like trips to the mall or grocery store, dinners at restaurants, and exercise classes.  A small staff and volunteers also assist with any problems the members may encounter.

I thought this was a pretty cool alternative. Seniors still have their freedom but don’t have to be on their own or depend on family members for help.  According to the segment, there are currently 140 villages across the country and over a 100 more in development.

Depend on Your Friends and Family

If this alternative worries you, it probably should. It’s by far the riskiest in my opinion. But it’s not beyond the realm of probability and many people use this option.

I will do anything for my mom should she need it. I’m sure many other children feel indebted to their parents for the love and care they received growing up.  Even those without children have and can develop a network of friends that they can depend on.

However, when using this alternative make sure to consider the lives of those caring for you. In addition, they may not have the expertise that you need should you require constant care.  That situation may necessitate a home health aide or homemaker services.

I often joke that I don’t want to get old. But the reality is that we all will. So you should hope for the best and prepare for the worst. With any luck, long-term care insurance or one of these alternatives will work for you.