Who should consider Long Term Care insurance?
Many planners refer to LTC insurance as "asset protection."
Individuals need to have assets worth protecting in order
to justify the purchase of a policy. (Medicaid eventually
pays for Long Term Care services once an individual becomes
In other words, if you are able to pay the premiums without
having to change your lifestyle – you should transfer
that risk to the insurance company.
Health is another important consideration. The state of one’s
health is a determining factor in one's ability to secure
protection. This sometimes poses a problem as people don't
often consider Long Term Care until an unfortunate event has
affected their health or the health of a loved one.
In home, or facility care may be required by anyone, not
just seniors. Care is usually required as a result of the
effects of aging, either because a person has become physically
unable to carry out everyday activities or because they experience
cognitive impairment, such as Alzheimer's disease. Other times,
long-term care may be needed because of chronic disease or
while recuperating from an accident or serious illness.
What is Long Term Care Insurance?
Long Term Care Insurance has been around in one form or
another since the early days of Medicare. The policies during
this time bear little resemblance to today’s policies.
While early products were similar to a basic Medicare supplement
policy, today Long Term Care insurance has evolved and typically
covers a broad range of services including nursing home care,
assisted living facilities and adult day care.
Like any coverage, this type allows the insured to pay an
affordable premium to protect an unaffordable catastrophic
What to look for in a quality policy
This policy is for the "long-term." It is important
to keep this in mind before purchasing from a carrier with
inferior financial strength. Many policyholders do not receive
benefits for 10 to 20 years after issue.
Adequate Daily Benefit
Proper Care can be expensive. They may easily exceed $130
per day in most parts of the country and in excess of $200/day
in metropolitan areas. It is important to be aware of the
costs in your area when selecting a daily benefit. Average
costs per state can be found on our Free
Instant Quote page .
Over time, the cost of services increase. Long Term Care services
are no different. For example, a nursing home that charges
$130/day today will charge $260/day in 14 years assuming a
5% growth rate. Inflation options need to be selected at time
of issue, and do not under-estimate the power of compound
At the time the policy is issued, we do not have a crystal
ball to determine where we will end up receiving services
such as nursing home, home care, adult day care, ect. It is
comforting to know that you will get benefits in a variety
Ask your financial representative about their company's claims
process. This is the most important aspect of an Long Term
Care policy and yet the most ignored. Questions to ask would
be as follows:
- Describe the carriers claims process?
- What percentage of claims that have been filed are paid?
LTC carriers have the right to raise premiums. The policies
are "guaranteed renewable" which prevents a carrier
from singling out individuals for rate increases, but they
may raise premiums for a "class" of policyholders.
Be careful of carriers that are priced substantially below
the competition. Again, ask your representative if the proposed
carrier has ever increased in-force premiums.
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