Nobody knows what will happen in the future, but it is wise to prepare for worst case scenarios. Long-term care is an emotionally charged topic because it is difficult to think about our loved ones and ourselves being incapable of living independently. Long-term care insurance may be a smart choice that can protect you from the financial hardship that can come with paying for long-term care.
Take John and Emily, for example. They worked hard and managed to save $300,000 by retirement. When John was 67, he was diagnosed with Alzheimer’s disease. Initially, his condition was not too bad. Emily used their savings to hire a home care specialist, but day by day his condition worsened and Emily decided that John had to go into a nursing home where his needs could be met. Sadly, after several years of long-term care, John passed away. Emily, now 72, has to work full time because John's long-term care used up all of their $300,000 of retirement savings. Every year many couples will be forced to use their retirement savings for long-term care. However, with long-term care insurance, this situation can be avoided.
What does Long Term Care mean?
As people grow older or become ill, they may need help performing daily tasks. When loved ones or friends are unable to provide them with the help they need, professional long-term care providers can help them lead happy and productive lives. Long-term care providers can assist a person when carrying out daily routine activities such as dressing, bathing, or getting in or out of bed. Long-term care insurance covers the care expenses due to chronic medical conditions. Obtaining long-term care insurance is one way to avoid the stress of paying for long-term care.
What Does Long Term Care Insurance Cover?
A long-term care insurance policy will reimburse you for the care provided in places such as:
- In-home care
- Adult daycare services
- Nursing home
- Care coordination
- Home modification
- An assisted living facility
Deciding when to purchase long term insurance can be a difficult decision. If you purchase long term care insurance when you are too young, you could end up spending more on the insurance than the benefits it will provide. However, a person who already has a weakening condition may not qualify for long term insurance. Most people decide to buy long term insurance in their late 50s to mid-60s. Deciding when to purchase long term care insurance will depend on your personal risk preferences and situation.
Why Consider Buying Long Term Care Insurance?
Long term care services will not be covered by regular health insurance, so you must decide if you want to purchase long term care insurance to cover the costs or you want to pay for long term care out of your savings. If you purchase long term care insurance you are taking the risk that you will not need long term care and all of the money you spent on long term care insurance will have been wasted. If you do not purchase long term care insurance you are taking the risk that long term care will deplete your savings, leaving no money for your spouse or heirs. Some people incorrectly believe that at their time of need, Medicare will come to the rescue to pay for long term care. This is wrong because Medicare only covers short stays at a nursing home or home health care in limited amounts. If you don't have adequate savings or long term care insurance to cover the cost of long term care, you may not be able to receive any long term care. There are two other reasons for which people buy Long Term Care Insurance:
For saving protection
The costs of long-term care without insurance can deplete the savings quickly. The median price of a semi-private room is $89,297 a year, and other medical expenses also add to the cost.
More choice for care
The more money a person spends, the more care he gets. Relying on Medicaid will limit the choices to the nursing homes that are eligible under the government program.
Long Term Care Insurance Costs
The cost of LTC insurance depends on many factors, such as:
- Generally, women pay more than men do as they live longer, and women have more chances of making insurance claims.
- The price of coverage varies among insurance companies. Different companies charge different amounts for the same coverage and offer different levels of coverage. This is the reason why it is necessary to compare quotes from different companies.
- The older the person is, the more health problems are expected, and more the person will have to pay to buy a policy.
- Premiums for single people are more than those for married people.
- Higher levels of coverage will require higher premiums. The most costly coverage includes higher limits on the lifetime and daily benefits, short elimination periods, significant cost of living increases, and more options for type of care covered.
How to Buy LTC Insurance
Long Term Care insurance can be purchased from an agent or an insurance company. Some employers provide the opportunity to purchase the LTC policy at work with deduction from wages. These employers buy the policies at group rates from their brokers that may be less expensive than policies you could purchase on your own.
Compare the prices of a particular level of coverage by getting quotes from several companies. To get the best rate for a particular level of coverage, the American Association for LTC Insurance advises working with an insurance agent who can sell policies from a minimum of three different carriers. In a price comparison conducted in the year 2019, the American Association for LTC Insurance found that there is a wide variation of rates among insurers, so it pays to shop around.