Long Term Care Insurance
Long term care is something no one wants to think about themselves or their loved ones being unable to live on their own. But this is likely in your future. So, you should take a good look at how you are going to pay for it.
Long term care insurance covers the cost for a nursing home, assisted living facility or in home care when you (or a loved one) get older and starts dealing with health issues. Long term care is defined as any care that is longer than three months. It offsets the increasing costs of long-term care as you age and gives you peace of mind because it protects your savings you worked so hard to build. If you or your spouse becomes ill, you can afford the care you need without raiding your retirement savings.
Keep in mind that insurance is not one size fits all. You need to do what is right for you and your family. Long term care insurance policies are NOT standardized. As a result, there are several items in every policy you should consider that will determine the type of benefits to be paid, the care that will be covered and how easily you can access and start using your long-term care benefits.
- Duration of Benefits- You can buy a policy that pays benefits for only 1 year or one that pays for 2, 3 or 5 years. Companies no longer offer benefits for as long as you live.
The premium you will pay is based on the benefit package for each year of coverage you buy, your age and gender and other factors. In general, the longer the benefits last, the more expensive the policy premium will be.
- Benefit Triggers– Before long-term care insurance companies will pay benefits; certain conditions must be met. Benefits are triggered when you can’t perform a specified number of normal activities of daily living (ADL), as bathing, dressing or eating, or when you have a cognitive impairment or dementia caused by Alzheimer’s disease or other conditions. These functional or cognitive impairments are determined by measuring a person’s ability to perform the ADL’s or by testing their cognitive abilities. When a person cannot perform a specified number of ADL’s or has a cognitive impairment or dementia that requires assistance or supervision, benefits may be payable.
- Waiting Periods– A waiting period for long term care insurance works like a deductible. It is the amount of time before a policy will begin paying benefits, after someone is eligible to receive them. You may choose NOT to have a waiting period, to 30, 60 or 90 days. Some companies count only the days you receive paid care against the waiting period. Others count every day from the first day you become eligible for and receive care. Some companies require you to meet this waiting period only once in your lifetime; others require you to meet it within a specific number of days or months or each time you qualify for benefits and need assistance. Most companies will NOT count the care you receive from family members as part of the waiting period.
4. Daily Benefit Amount- The daily benefit amount is the maximum amount long term policies will pay for each day of care. Some policies pay this amount when you are in a nursing home, but only a percentage of that amount for all other types of care.
- Maximum Policy Benefits– Maximum policy benefits equal the total dollar amount a long-term care policy will pay for your care once you begin using your benefits.
- Facility Covered- Most policies cover skilled, intermediate, and custodial care received in any of the approved Make sure the facility you wish to receive care for is properly registered with the State. In-home care also needs to be received from a licensed personal service agency under most policies.
- Inflation Protection- If you choose this protection, the amount of your daily benefit will increase annually, and the premium will be higher. This benefit helps the policy limits to keep pace with inflation.
- Tax Implications– Most insurers offer tax-qualified policies which come with tax free benefits and deductible premiums.
- Insurer Reputation– With many providers exiting the market in recent years, it is important for customers to practice due diligence and pick an insurer that is both financially stable and committed to offering policyholders the best care possible.
Long Term Insurance Providers Include:
Genworth
Banker’s Life
John Hancock
Mutual of Omaha