Long-term care insurance policies help cover costs related to caring for individuals with chronic medical conditions, disabilities, and disorders.
It is likely that at some point in your life, you will need help with your daily activities. The US Department of Health and Human Services estimates that 70% of people over 65 will eventually need long-term care, whether in a home, a nursing home, or a nursing home. Nursing home.
Long-term care insurance is different from disability insurance in that it may help cover the costs of these services and may help you conserve your financial resources. Just follow a few guidelines and keep these factors in mind if you’re thinking about buying coverage.
Why do I need long-term coverage?
A long-term insurance policy helps cover costs related to caring for people with disabilities, chronic medical conditions, and disorders such as Alzheimer’s disease. In most cases, policies reimburse you for care received at places like:
- Your home.
- A home for the elderly.
- An assisted living facility.
- A daycare center for adults.
In most cases, this allows:
- Savings protection. Long-term care can quickly deplete your retirement savings. A long-term care policy helps offset the cost associated with additional care needed.
- Allows for more care options. Medicaid does not cover assisted living expenses in many states. A long-term care policy helps offset the cost of those facilities.
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When should you get a long-term care policy?
Look into long-term care insurance long before you need it. The longer you wait to buy a plan, the higher your initial premium could be. Also, if you wait, you are more likely to develop a medical condition that may disqualify you from coverage. Although there is no right age to buy, the American Association for Long-Term Care Insurance estimates that more than half of long-term care policies are purchased by people between 55 and 64. Long-term care policy rates typically include the following:
- Your age and health: As you get older, you typically have more health problems increasing your premiums.
- Gender: Women typically live longer than men, increasing the likelihood of a long-term care claim.
- Marital Status: Typically, premiums for married couples are lower than for singles.
- Amount of coverage: Additional coverage options, such as higher limits on daily and lifetime benefits, cost-of-living adjustments for inflation protection, and shorter elimination periods, may increase the premium.
How do I find a long-term care policy?
Coverage and cost vary, so look for a reasonably affordable plan based on the coverages you want, rather than picking the first one you find.
It is not always easy to evaluate plans. Compare these key features:
- Activation of benefits. The criteria the insurer uses to determine when your policy will go into effect.
- Elimination period. The number of days you will pay for care out of pocket before you start receiving benefits. The minimum elimination period for many long-term care plans is thirty days.
- Daily benefits. The amount the policy will pay daily. Some plans pay benefits based on hours of service, such as the number of hours a home health aide visits your home.
- Inflation adjustments. A feature that helps your benefits keep pace with rising costs.
- Types of service. A description of what is covered under each plan and where you can receive this care, whether at home or in an assisted living facility, an adult daycare facility, a nursing home, or other options.
- Duration of benefits. The period you will receive benefits, from a few years to the rest of your life.
- Exclusions. The stipulated conditions or events that the benefits will not cover. These could include conditions caused by alcoholism or dangerous behavior.