Why are long-term care costs so hard to predict?
There are a few reasons. One, long-term care costs can vary from zero to well over a million dollars over the course of a client’s lifetime. Two, long-term care costs are closely tied to the longevity of a client. The longer a person lives, the more the chances of incurring a long-term care event. A healthy person with a long expected lifespan will have more risk for long-term care costs than an unhealthy person with a short expected lifespan. Third, a huge amount of actuarial calculations must take place to compute the probability distributions. Fourth, an assessment of the longevity and propensity for long-term care of the client must be assessed. So a combination of the nature of long-term care costs and the work required to perform the computations is why these costs are hard to predict.