Long Term Care Insurance

Long term care refers to the many services beyond medical care used by people who have chronic long-lasting) illnesses or disabilities. Individuals who require long term care insurance are generally not sick in the traditional sense, but are unable to perform the basics of daily activities such as dressing, walking, bathing, toileting, eating, and getting in and out of bed.

Long term care insurance helps a person pay for the services that assist an individual to perform their daily activities, having this assistance can be very expensive. A long term care policy also ensures that the insured can make their own choices about what long term care services they would like to receive and where to receive them.

Long Term Care Insurance isn't Covered by Ordinary Health Insurance Plans.

The good news is that people are living longer and longer these days. However, the flip side is that there are more years in which there is a risk of having serious health problems. Unfortunately, most ordinary health insurance policies or Medicare) do not pay for long term care expenses. Medicaid, a federal/state health insurance program, will only pay for long term care if you have already spent the majority of your life savings and other assets.

What Does Long Term Care Insurance Cover?

Long-term care insurance will typically cover the cost of:

  • Visiting nurses to help in your home with daily activities like bathing, dressing, eating and cleaning.
  • Care in a nursing home.
  • Community programs: adult day care.
  • Assisted living services that are provided in a special residential setting other than your own home). These services may include health monitoring, meals, and help with daily activities.

When is the right time to buy a Long Term Care Insurance Policy?

Most people will not think about long-term care until they get into their 70s and 80s and their health begins to deteriorate. At this time, you may be too high a risk for an insurer to cover you, some long-term care policies even has restrictions on health status and age. Even if you do qualify, the premiums can be enormous.
Middle-aged people have the strongest likelihood of being eligible for a policy and premiums costs might be lower.

Is a long-term care policy right for you?

Long term care insurance is probably not for everyone, but it's a good idea to consider it. Soaring health care costs, insurance companies increasingly restricting eligibility and coverage, and people's need to stretch retirement savings through more years are the main reasons why people should look into this type of coverage. Your goals should be to minimize your dependence on other family members, protect your assets, and control how and where you receive your long-term care services.
On the other hand, long-term care insurance is expensive. A person who is 65 years old and in good health can expect to pay between $2,000 and $3,000 a year for a policy that covers nursing home care. If the cost of premiums will lower your standard of living or force you to give up other things you need, you may not want to buy a policy. Also, be sure you'll be able to afford the premiums if your income declines.

Key Issues

  • Coverage. You can choose long-term care policies that pay for a variety of different options. Some pay only for nursing home or home care. You can opt to purchase a plan with a mixture of care options that includes nursing home, assisted living, and adult day care. Some will even pay for a friend or family member to care for you in your home.
  • Benefit Period. Your benefit period determines the duration of time for which that policy will pay for your care. You can choose a benefit period that spans from two to six years, or the rest of your life.
  • Daily or Monthly Benefit. The daily or monthly benefit is the maximum dollar amount the insurance company will pay for each day or month you are covered by a long-term care policy. If the cost of care is more than your daily or monthly benefit, you will need to pay the balance out of your own pocket.
  • Elimination or Waiting Period. During this period, you must pay all of your long-term care expenses out of your own pocket. This period could last anywhere from 0 to 100 days. The longer the waiting period is, the lower your premiums will be.
  • Inflation Protection. Inflation is adding to the rise in health care costs every year, buying a policy without inflation protection is probably buying a policy that won't cover much of your expenses. Long term care policies are required to offer options to protect against inflation. There are two main kinds of inflation protection: the right to add coverage at a later date; and automatic coverage increases.
  • Non-Forfeiture Benefit. Policies with this benefit will continue to pay for your care even if you stop paying premiums. This policy feature can add 10 percent to 100 percent to your premium.
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