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Long term care insurance

long term care insurance

Long-term care insurance is a type of insurance that provides coverage for services that are not covered by regular health insurance. These services include assistance with routine daily activities such as bathing, dressing, or getting in and out of bed. Long-term care insurance policies help cover the costs of care when you have a chronic medical condition, disability, or disorder such as Alzheimer’s disease. In this article, we will explore what long-term care insurance is, what services it covers, how it differs from regular health insurance, and why it is important to consider when planning for your future.

What is long-term care insurance?

Long-term care insurance is a type of insurance that provides coverage for services that are not covered by regular health insurance. These services include assistance with routine daily activities such as bathing, dressing, or getting in and out of bed. Long-term care insurance policies help cover the costs of care when you have a chronic medical condition, disability, or disorder such as Alzheimer’s disease.

What services are covered by long-term care insurance?

Long-term care insurance policies will reimburse you for care given in various places, such as your home, a nursing home, an assisted living facility, or an adult day care center. The services covered by long-term care insurance include:

– Assistance with routine daily activities such as bathing, dressing, or getting in and out of bed

– Skilled nursing care

– Physical, occupational, or speech therapy

– Homemaker services such as meal preparation, cleaning, or laundry

– Personal care, such as help with toileting or incontinence care

– Respite care for caregivers

How is long-term care insurance different from regular health insurance?

Long-term care insurance differs from regular health insurance because it covers services not covered by regular health insurance.

Regular health insurance covers medical expenses such as doctor visits, hospital stays, and prescription drugs. Long-term care insurance, on the other hand, covers the costs of long-term care services not covered by regular health insurance.

Why is long-term care insurance important?

Considering long-term care costs is an important part of any long-range financial plan, especially in your 50s and beyond. Waiting until you need care to buy coverage isn’t an option. You won’t qualify for long-term care insurance if you have a debilitating condition, and long-term care insurance carriers won’t approve most applicants older than 75.

 Most people with long-term care insurance buy it in their mid-50s to mid-60s. Long-term care insurance is important because it offers peace of mind, knowing that you won’t drain your assets or put undue pressure on family members.

Why do you need long-term care insurance?

Long-term care insurance is an important consideration for anyone planning for their future. Here are some reasons why you need long-term care insurance:

Statistics on the likelihood of needing long-term care

According to the Urban Institute and the U.S. Department of Health and Human Services, the average 65-year-old today has a 70% chance of needing some long-term care eventually. Of those who need it, most would use it for about two years, but around 20% would require it for more than five years. These statistics show that the likelihood of needing long-term care is high, and it is important to plan for it.

The high cost of long-term care

Long-term care is expensive, and the cost is only increasing. The average cost of long-term care insurance is $1,200 a year for a 60-year-old man for $165,000 coverage. However, the cost of long-term care insurance varies by age, health, coverage amount, and other features. In 2021, 55-year-olds paid about $102 per month on average for $165,000 in level benefits. The cost of long-term care insurance can be expensive, especially if you have health issues, and typically increases as you age. An insurance company may approve you for a long-term care insurance policy if you’re in poor health, but you would likely pay higher rates than other members.

How long-term care insurance can protect your retirement savings

Long-term care insurance can protect your retirement savings by covering the costs of long-term care services not covered by regular health insurance. Without long-term care insurance, you may have to pay for long-term care services out of pocket, quickly depleting your savings. Long-term care insurance offers peace of mind, knowing you won’t drain your assets or put undue pressure on family members.

How to choose a long-term care insurance policy

Choosing a long-term care insurance policy can be a complicated process, but there are several factors to consider to ensure that you choose the right policy for your needs. Here are some factors to consider when choosing a long-term care insurance policy:

Factors to consider when choosing a policy

– The daily benefit amount: This is the amount of money the policy will pay per day for long-term care services. You should choose a daily benefit amount that will cover the cost of care in your area.

– The amount of inflation protection: Inflation protection ensures that your benefits keep pace with the rising cost of care. It would help if you chose a policy with inflation protection to ensure your benefits don’t lose value over time.

– The length of benefit payments: This is the length of time the policy will pay for long-term care services. It would help if you chose a policy with a benefit period that matches your needs.

– The waiting period before benefits begin: This is the time you must wait before the policy starts paying for long-term care services. You should choose a waiting period you can afford to pay out of pocket.

– Your current age: The younger you are when you buy long-term care insurance, the less expensive the premiums will be.

How to determine how much coverage you need

To determine how much coverage you need, consider the cost of long-term care services in your area and how much you can pay out of pocket. It would help if you also considered your family and health history to determine your likelihood of needing long-term care services.

How to compare policies from different insurance companies

When comparing policies from different insurance companies, consider the above factors and compare the policies based on their coverage, benefits, and costs. It would help if you also researched the financial strength and reputation of the insurance companies to ensure that they can pay out claims when needed.

How to buy long-term care insurance

Buying long-term care insurance can be a complex process, but there are several steps you can take to make it easier. Here are some tips on how to buy long-term care insurance:

When to buy long-term care insurance

The best time to buy long-term care insurance is in your 50s or early 60s, when you are still healthy, and premiums are more affordable. Waiting until you are older or have health issues can make it more difficult to qualify for coverage and increase the cost of premiums.

How to apply for long-term care insurance

To apply for long-term care insurance, you must complete an application and answer health questions. The insurer may also ask to see your medical records or require a medical exam. It is important to be honest when answering health questions, as misrepresentations could result in a denial of coverage or cancellation of the policy.

How to work with an independent insurance agent to find the right policy

Working with an independent insurance agent can help you find the right long-term care insurance policy for your needs. An independent agent can provide you with quotes from multiple insurance companies and help you compare the coverage, benefits, and costs of each policy. Here are some steps to take when working with an independent insurance agent:

– Research potential agents to find one with experience in long-term care insurance.

– Schedule a meeting with the agent to discuss your needs and budget.

– Ask the agent to provide you with quotes from multiple insurance companies.

– Compare the coverage, benefits, and costs of each policy to determine which one is right for you.

– Ask the agent to explain any terms or conditions you don’t understand.

How to use long-term care insurance

Using long-term care insurance can be a complex process, but there are several steps you can take to make it easier. Here are some tips on how to use long-term care insurance:

How to file a claim

To file a claim, you must contact your insurance company and provide them with the necessary information, such as your policy number and the care details you received. The insurance company will then review your claim and determine whether it meets the requirements for coverage. If your claim is approved, the insurance company will pay for the covered services directly to the care provider.

How to choose a care provider

Long-term care insurance policies typically allow you to choose your care provider, whether a nursing home, assisted living facility, or home health care provider. When choosing a care provider, consider factors such as the quality of care, the cost of care, and the provider’s location. You should also ensure that the care provider is licensed and meets the requirements of your insurance policy.

How to manage your policy over time

It is important to review your long-term care insurance policy regularly to ensure that it still meets your needs. You should review your policy whenever you experience a major life change, such as a marriage, divorce, or death in the family. You should also review your coverage once a year with a licensed insurance agent to ensure that your policy still provides the coverage you need at a price point you can afford. If your long-term care coverage includes a compound inflation rider or a purchase option, it is especially important to review your policy regularly.

Alternatives to long-term care insurance

Long-term care insurance is not the only way to pay for long-term care services. Here are some alternatives to long-term care insurance:

Self-fund with savings

One alternative to long-term care insurance is to self-fund with savings. This means setting aside money for long-term care services in a high-yield savings account or retirement plan. While this option can be cost-effective, it requires careful planning and budgeting to ensure you have enough money to cover the cost of care.

Short-term care insurance

Short-term care insurance is another option for those who do not want to pay ongoing premiums for a product they may never use. Short-term care insurance typically offers coverage for up to a year and is easier to qualify for than long-term care insurance. However, the coverage is limited and may not be sufficient for those who need long-term care services for an extended period.

Annuities with long-term care riders

Annuities with long-term care riders are another alternative to long-term care insurance. With this option, you provide an insurer with a one-time lump sum, and in return, they give you consistent income for the rest of your life. If you need long-term care services, the annuity will pay for them, and if you do not, the annuity will continue to provide income. However, this option can be expensive, and the income provided may not be enough to cover the cost of long-term care services.

Critical care insurance

Critical care insurance is a type of insurance that pays a lump sum if you are diagnosed with a critical illness such as cancer, heart attack, or stroke. This lump sum can be used for long-term care services if needed. However, this option may not provide enough coverage for those who need long-term care services for an extended time.

Reverse mortgage on your home.

A reverse mortgage on your home is another option for those who need to pay for long-term care services. With a reverse mortgage, you can borrow against the equity in your home to pay for long-term care services. However, this option can be expensive, and you may need to sell your home to repay the loan.

Insurance Company Estimated Average Annual Premium for a 55-year-old male ($165,000 policy)
Mutual of Omaha $1680
Northwestern Mutual $1720
State Farm $2290
Genworth Financial $2000
Bankers Life $2100
National Guardian Life $2400
New York Life $1850
Thrivent $2500
Lincoln Financial Group $2100
Nationwide $2400
Average $1950

Please note that the actual premium may vary based on the specific terms of the policy, the health of the individual, and other factors. For the most accurate information, it’s recommended to get a quote directly from the insurance companies.