An accident, illness, or the effects of age may create the need for long-term health care. If that happens, you'll want the best possible care without incurring financial difficulties. Long-term care insurance can cover nursing home stays, home health care and community-based services.

Should you purchase a long term care insurance policy? As a general rule of thumb, if you have less than $500,000 in assets to protect, it is probably not a good idea to get long term care insurance since you should qualify for Medicaid. If you have more than $2,000,000 in assets, self-insurance – where you simply pay for expenses as they occur – is probably your best bet.

If your assets fall somewhere in between then long-term care insurance might be a good option. Look for a policy that covers nursing home stays and assisted living. If the policy covers in-home care, make sure it offers a full range of community-based services including adult day care, or be sure you can receive monthly cash allowances that you can spend however you choose for your care.