Long-term care insurance policies help cover the costs associated with caring for individuals with chronic medical conditions, disabilities, and disorders.
It is likely that at some point in your life you will need help with your daily activities. In fact, LongTermCare.gov estimates that 70% of people age 65 and older may need long-term care, whether it’s in a home, senior community, or nursing home.
Long-term care insurance differs from disability insurance in that it may help cover the costs of daily activities, such as:
- Getting in and out of bed
- Take a bath
- Get dressed
- use the toilet
It could help you conserve your financial resources. Just keep a few guidelines and ten these factors in mind if you’re thinking about buying coverage.
Why do I need long-term care insurance?
A long-term care insurance policy helps cover costs related to caring for people with disabilities, chronic medical conditions, and disorders like Alzheimer’s disease. In most cases, insurance policies reimburse you for care received at:
- your home
- A nursing home
- An adult day care center
- A nursing home for the elderly
In most cases, this allows:
- Savings protection. Paying for daily care on your own can quickly drain your retirement savings. A long-term care policy helps offset the cost associated with additional care needed.
- More care options. Medicaid may not cover nursing home expenses, this varies by state. A long-term care policy helps offset the cost of those facilities.
When should I get a long-term care insurance policy?
Look into long-term care insurance long before you need it. The longer you wait to buy a plan, the higher your initial premium could be. Also, if you wait, you could develop a medical condition that disqualifies you from coverage. Although there is no appropriate age to buy, the American Association for Long Term Care Insurance estimates that more than half of long-term care insurance policies are purchased by people between the ages of 55 and 65. Rates for a long-term care policy typically include:
- Your age and health: As you get older, you typically have more health problems that could increase your premiums.
- Gender: Women typically live longer than men, increasing the likelihood of a long-term care claim.
- Marital Status: Typically, premiums for married couples are lower than for singles.
- Coverage Amount: Additional coverage options, such as higher daily and lifetime benefit limits, cost-of-living adjustments to protect against inflation, and shorter elimination periods, may increase the premium.
How do I find a long-term care insurance policy?
Coverage and cost vary, so look for a reasonably affordable plan based on the coverages you want, rather than picking the first one you find.
It is not always easy to evaluate plans. Compare these key features:
- Benefit Activation: The criteria the insurer uses to determine when your policy will become effective.
- Elimination Period: The number of days you will pay for care out of pocket before you start receiving benefits. The minimum elimination period for many long-term care plans is thirty days.
- Daily Benefits: The amount the insurance policy will pay daily. Some plans pay benefits based on hours of service, such as the number of hours a home health aide visits your home.
- Inflation Adjustments: A feature that helps your benefits keep up with rising costs.
- Types of services: A description of what is covered under each plan and where you can get this care, whether it’s at home or in a nursing home, adult day care center, nursing home, or other options.
- Benefit Duration: The period for which you will receive benefits, from a few years to the rest of your life.
- Exclusions: Stipulated conditions or events that benefits will not cover. These could include conditions caused by alcoholism or dangerous behaviors.