About 70% of those turning 65 will need long term care at some point during their lives, yet not everyone takes out long term care insurance to help cover this expensive yet unpredictable medical expense.
Making an educated decision regarding long term care coverage may protect both personal savings and provide peace of mind to loved ones who would otherwise need to pay for care themselves.
What are the goals of long-term care insurance (LTCI)?
- While there’s no definitive answer, one general goal of long-term care insurance (LTCI) should be to cover expenses not reimbursed or covered by Medicare or other sources, such as spending down assets or protecting estates of loved ones.
- Long-term care insurance is designed to cover many forms of care, from home healthcare and assisted living facilities to Medicaid eligibility – allowing you to keep more of your own assets while receiving needed care.
Before selecting a long term care insurance policy, take time to carefully consider your goals and the premium amount you can afford each year. Furthermore, think about how long you want coverage to last as well as whether or not a rider allows for increasing benefits over time to help keep pace with inflation.
Another key element of choosing the ideal policy for you and your budget is selecting a type of coverage that meets both. Options may include traditional, hybrid and shared-care policies – each offers its own set of advantages. With traditional policies you will receive a lump sum which can then be used towards paying for care should it ever become necessary; depending on your age and health conditions at application time this amount could range anywhere between $2000-$12000 depending on how long the policy lasts for.
Higher Premiums for these Conditions
As a general rule, the older and sicker you are, the higher your premiums will typically be for long term care insurance policies. Gender can also play a factor; women typically pay more due to having longer lives expectancies and an increased chance of needing long term care services than men do. Your marital status also has an effect; married couples typically pay less than single people.
Another alternative is a hybrid policy, which combines elements from both traditional and asset-based insurance plans. You might receive a lump-sum payment that can help pay for care or reduce private-pay premiums; then tap your assets to cover remaining expenses, making hybrid plans more cost effective than their counterparts. Furthermore, many hybrid policies provide shorter elimination periods than traditional plans.
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