Mary Olson, a widow, is age 62. Her husband, George, died last year of lung cancer. Due to George's poor health for the past 20 years, Mary had been the sole breadwinner of the family. She has two adult children and one grandchild who live in a neighboring state. Mary's mother, Alice, who is 88, lives in a nearby nursing home. All of Alice's assets were used to pay for her health care and living expenses. She is now supported by Social Security and Medicaid. Mary's only sibling, a sister, died two years ago at age 52 of breast cancer. Mary plans to leave her estate to her children and grandchild. Mary's assets consist of the following:

Home (no mortgage), current value $285,000

401(k) plan, current value $315,000

Savings, investments, IRA, and miscellaneous personal property, current value $165,000

Use outside information to answer the questions.

1. Should Mary purchase long-term care insurance? Why or why not?

2. How does long-term care insurance work?

3. What do people who need it need to watch out for when purchasing this insurance?