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Long-Term Care Insurance


Long-Term Care Insurance 101

Long term care is when the elderly need assistance with their normal daily activities due to physical disabilities and mental impairments such as memory loss, Alzheimer’s and dementia. The rising costs of nursing homes, assisted living and extended care facility can quickly erode the savings of pensioners. The best way to reduce this risk is to purchase long-term care insurance.

The primary reason to buy long term care insurance is to preserve your assets in the case you ever need assisted living, home care or a nursing home stay. Long-term care insurance helps you pay for these services, which are very expensive and over time, can be financially devastating. By purchasing a long-term care policy you can also make those decisions yourself as to how you want to live out your life.

There are different types of long-term care insurances available.

Skilled Nursing Care is when condition requires intensive medical attention for a period of less than 100 days. To help the elderly with comfort and assistance when the situation is terminal or to assist during a recovery period.

Hospice Care is for individuals facing a terminal condition or patients have less than six months to live. This care can be provided in a home or a facility.

Non-skilled nursing care/custodial is caring for a person with a chronic illness from which they will not recover. This type of care is usually received at home or in assisted living facilities. Care may lasts beyond 100 days and even up to several years.

Home care is assisted care at home. There are more than 10 million people receiving care at home and home care is projected to increase in the future.

Facility care is care in an assisted living community, adult day center, continuing care retirement community or nursing home.

Respite Care is a temporary care services for the elderly whose family members normally take care of them but need assistance during holidays or rest periods. This care can be provided in the home or at a facility.

The cost of LTC (long-term care) insurance coverage depends on the specifics of coverage. Many factors influence how much a policy may cost the insurer, including the place in which the care is received, the reason for care or severity of the patient/insured’s condition, the daily benefit amount, the elimination period and the time frame in which benefits will be paid, etc. The cost for continued medical care is expensive.

Many of the elderly will need long-term care at some time or another. And that number is forecasted to increase as the baby boomer generation ages.

There a different types of policies available. The most popular are called ‘indemnity’, ‘expense incurred’ and ‘cash policies’.

Indemnity plans payout a fixed benefit amount.

Expense incurred policies reimburse you for expenses incurred up to you fixed benefit amount as defined by the daily benefit amount plan purchased.

And a cash-based policy pays out benefits on claims whether you are at home being cared for by family members or in an assisted care facility.

Typically you should buy long-term care for a minimum of 3 years. You may also consider buying a guarantee of insurability rider in the case of deteriorating health status. There is always the possibility that you may never use your benefits so consider purchasing a ‘return of premium’ rider.

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Why You Need Long-Term Care Insurance

Financial advisor Missy Spickler explains why you are likely to get far more in benefits than you pay in premiums.