Long Term Care Insurance – What Is It and Is It Right For You

Modern medicine allows us to live longer and to be “patched up” when we get hurt. We are living longer, but as the years go on, we may find ourselves challenged to care for our daily needs and provide the necessary functions of everyday life, due to aging, accident, or maybe disease.
We’re cautioned to provide for our loved ones by purchasing life insurance, but this may not be the only insurance policy that the more senior generation needs to think about. We might also benefit by having Long Term Care Insurance. The doctors will keep us alive, but will we be able to fully care for ourselves in our old age or in case of a life altering accident or disease?

Here are a few short answers about Long Term Care:
  • Long Term Care Insurance covers care for someone dealing with a chronic health condition who may need help with basic needs like bathing and feeding.

  • Long Term Care policies are not necessarily for nursing home costs. Policies can cover assisted-living and home-care situations, too.

  • Policy costs vary widely from state to state so, if possible, base your costs on where you plan to retire, not necessarily where you live now.

Long Term Care insurance is not “nursing home" insurance, but a good policy can cover some or all of the costs associated with assisted-living facilities and in-home care, plus traditional nursing home care if needed. Many times, this type of insurance is what keeps people out of nursing homes and able to live a rewarding life in their elder years.

Most would agree that a long term care policy is cheaper in the long run than nursing home care. Take into account the fact that in 2009 nursing home care costs an average of $200 per day or approximately $75,000 per year (according to a well-known insurance market institute). An assisted-living facility may cost an average of $2,500 a month—and twice that cost for a person with Alzheimer’s or other form of dementia. These costs will not be going down any time soon and you can expect them to go up with some regularity as the years go by.

Now, if you’re rich and can afford to self-insure, that is one thing; but if you or a loved one has to have assisted living care or move to a nursing home, your hard earned savings and other assets could be wiped out quickly.

A Long Term Care policy is cheaper if you purchase it while you are “younger”. Every ten years you wait to purchase this type of insurance the cost will probably double. Many experts agree that the time to start looking for a Long Term Care policy is when you reach age 50 to 55, unless you have a family history of Alzheimer’s or some other chronic condition. If this is the case, purchase a policy at a younger age. If you wait too long, you may be denied coverage because of deteriorating health.

There are many things to consider when purchasing a policy. See your trusted insurance representative to learn more about what to include in a good policy. Ask your friends for recommendations on a good agent if you don’t already have one. Inform yourself about coverage options by searching on the Internet or check in with AARP. Some of the points to consider in deciding how much coverage to purchase are:
  • Buy enough coverage for the area in which you will be living later in life. Find out the costs of nursing home care in that area.

  • You might choose a longer elimination period – those weeks before the insurance coverage begins, where you will pay some of the early costs yourself. You save money by having the policy begin after ninety days instead of kicking in at thirty days.

  • Get a policy that has good coverage for a shorter period of time, rather than less coverage over a long period of time. Studies show that most people won’t need Long Term Care for longer than four to five years.

  • You can often save money by purchasing two policies instead of one—so purchase a policy for yourself and for your spouse at the same time.

  • Try to afford a policy that has good inflation protection. The cost is higher, but you will want a policy with a daily benefit that increases with inflation. The cost for care today is not going to buy good care in twenty years because the value of the dollar is lost through inflation over the years.

Talk to a good agent about other options such as “partnership plans” which allow you to protect your assets by partnering with Medicaid if your private coverage is not enough to pay for all your needed care.

A good agent will also help you with the new “hybrid plans” that allow life insurance policies that are combined with long term care benefits -- so if you don’t use the long term care insurance, the money rolls into your death benefit. Also talk to the agent about Long Term Care Annuities, which this writer is not too familiar with, but as I understand it, beginning in 2010, you could be allowed to take money out of the annuity, tax-free, to pay for long term care. Get the scoop from your insurance agent.

Remember: you may not die in an accident or from old age before you require in-home care, an assisted-living facility, or a nursing home. We’re living longer in this day and age, but we don’t necessarily live into old age without help from outside sources. Consider whether protecting your savings and your assets with Long Term Care Insurance would be right for you.







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