Long-Term Care Insurance: How to Tell Which Policy Is Right for You

​Thinking about purchasing long-term care insurance? That could be a wise decision. The U.S. Department of Health and Human Services estimates that today’s 65-year-olds have a 70 percent chance of needing long-term care at some point.1
 
Long-term care is ongoing assistance with basic, day-to-day living activities such as bathing, eating, mobility and more. It’s usually provided in an assisted living facility, but it can also be provided in the home, either by family members or by in-home health aides.
 
Regardless of where the care is provided, it’s usually a costly service. Long-term care often costs thousands of dollars per month, and care is often needed for years. It’s easy to see how it can be a long-term drain on your savings.
 
Long-term care insurance is a popular and effective funding strategy. You pay premiums to an insurer, and the policy then provides coverage for some or all of your long-term care costs. However, policies can vary widely in terms of cost and benefits. You may find the choices overwhelming.

Below are five key components in every long-term care policy. If you understand these elements, you may be better informed to make a decision. A financial professional can also help you find the right policy for you.


Premiums
 
The policy premiums are the funds you must contribute to pay for the insurance coverage. Some policies require one-time, lump-sum premiums while others allow you to make monthly or annual premium payments.
 
Your premium amount is based on a few factors, including the policy benefits, your age and your health. You may have to go through an underwriting process that includes a medical exam before your premiums are finalized. Generally, the older or less healthy you are when you buy your policy, the higher your premiums will be.


Benefit Amount
 
Policy benefits can also vary. The policy’s coverage is usually expressed in a daily or monthly benefit amount. For example, a policy may pay up to $200 per day or $6,000 per month for care. You would be responsible for any costs that exceed that limit.
 
Your policy also may have a maximum lifetime coverage amount. Again, if your care exceeds this amount, you’re responsible for covering the difference. Higher benefit amounts usually lead to higher premiums.


Covered Services
 
Some long term care policies specifically list the exact types of conditions and services that are covers. For example, some don’t cover private rooms. Other policies may cover in-home care or even home modifications to accommodate wheelchairs or hospital beds. Some policies can even be used to reimburse your loved ones for care they provide.
 
Coverage varies widely by policy. It’s important to think about your goals and which types of services are important for you. Be sure to research policies carefully to make sure the covered care aligns with your objectives.


Waiting Period
 
Nearly all long-term care policies have a waiting period, also known as an elimination period. This is a period of time you must wait after you need care before the coverage kicks in. These periods usually last 30, 60 or 90 days. The longer your elimination period, the lower your premiums are likely to be.


Inflation Protection
 
Finally, you may want to choose inflation protection on your policy. This is usually an optional benefit, so it may increase your premiums. However, it’s an important feature that helps you keep up with rising long-term care costs. Inflation protection increases your benefit amount by a certain percentage each year. That could be especially helpful if you don’t expect to use the coverage until long into the future.
 
Ready to develop your long-term care funding plan? Let’s talk about it. Contact us today at UBC Retirement Income Planning. We can help you analyze your needs and implement a strategy. Let’s connect soon and start the conversation.

 
1https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
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