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LTC Insurance

hello friends, Today we discuss long term care insurance for the senior citizen.


Did you know that many statistical study results indicate that over 40% of those adults over age 65 will spend at least some time in a long term care facility? Typical costs for nursing home care range anywhere from $40,000 to $100,000 annually and in thirty years it’s expected that this cost will increase by over 300%.

Many people overlook this important coverage until it’s too late and very expensive. It may actually be one of the most important insurance purchases you’ll ever make.

There are many factors that make long term care policies complex and missing any small details may greatly affect the amount of coverage and care you’ll actually receive when you need it. You should get information and quotes on several policies, ensure that your sponsoring agent answers all of your questions and explains all of the details of the policy before you purchase one.

Here are some things you should consider when comparing long term care insurance policies:

 1) Long-term care insurance is NOT medical insurance. 

 Many people believe that LTC insurance covers the actual costs of medical care. It only covers expenses related to everyday life functions and living support. Some elderly people lack the ability to care for themselves due to physical or cognitive disease. LTC insurance will cover the costs associated with nursing homes, assisted living arrangements, adult day care and in-home care and common everyday life functions.

   2) Long-term care insurance is not just for the elderly.  

 Although it is typically advised that those age 60 or older should purchase LTC insurance, you should consider it as early as your 30’s. You can become paralyzed in an accident, develop a chronic degenerative disease or otherwise potentially need functioning care coverage. If you become ill in your 30’s you may need long term care for the next 60 years. In case that, you’re covered, then you will be in great shape. If not, then it will be too late. Another reason for purchasing LTC insurance earlier in life is that it may be cheaper from an overall cost basis if you purchase it early instead of waiting until you’re older. Ask your agent to compare the overall costs now versus when you’re older while considering the effects of inflation. You may determine that it’s actually cheaper to buy the policy now.

3)    Consider the benefits of shopping through an independent agent/ broker.  

There are many large insurance companies that offer long-term care insurance. Many offer very good policies, however, many large company agents are considered to be “captive agents” in that they have no flexibility in the types of plans they sell. Many must “tow the party line” and offer only policies offered by their main sponsor. A highly recommended source of long-term care insurance quotes from independent brokers is InsureMe. They’ll give you up to 5 quotes from independent agents in your area.  

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4)  Costs of LTC policies vary by age.  

The typical cost of a policy varies from about $400 annually for those people in their 30’s to over $1,000 annually for those in their 50’s or 60’s.   

5) There are three types of care settings that are covered by LTC policies.   

 They are home settings, assisted living facilities, and skilled nursing care facilities. You can find policies that will cover any of these, however, you should select one that covers all three since you can’t predict which type of care you’ll require. Be careful to ensure that the policy you select covers all of these settings.  Again, be certain to ask your broker or agent to go over this information with you. 

6) Be sure to understand the conditions under which the LTC coverage is triggered.   

The policy is triggered and begins to pay benefits when certain specific conditions occur. This triggering event is different depending upon the policy. Be certain to understand this and have your agent go over it with you in detail. The triggering events include cognitive impairment, medical impairment and failure of the ability to perform daily activities. Not all policies will kick in for all three types of triggering events. Some may not even consider medical necessity as a trigger and some policies will require that you first be hospitalized before any nursing home or in-home care benefits start. Be sure that your policy includes both medical necessity and does not have the “hospitalized first” restriction.   

7) Be sure to have an unlimited payout of benefits once triggered.  

 If you can afford to, then you should go with an unlimited payout term. Policies are usually stated in “increments of time” such as 4 or 6 years. You should weigh the risk of guessing how long you’ll need care versus the amount you’re willing to pay for the policy. Obviously, the longer the better.   

8) Compare the costs of long term care facilities in your area before determining coverage levels. 

 LTC insurance pays a daily benefit of anywhere from $50 to over $200. How much you need depends upon where you live. In New York, you could expect to pay upwards of $300 + per day for a nursing home while, in the midwest, you may pay less than $100 per day.   

9) LTC deductibles are complex and different from those found in other insurance types.  

 Deductibles are measured not in dollars but in days. The deductible could be 30, 60, 90 or 120 days of care that is out-of-pocket. The days may be consecutive or intermittent depending upon the policy. The deductible should be based upon your current and/or projected assets when you’re in your 70’s. Be sure you discuss this not only with your agent but with a financial advisor.  

10)  Consider inflation protection and “shared care” with your spouse.   

Inflation protection will automatically adjust your daily payout each year depending upon the inflation rate. In many cases, you can get this protection without an increase in your premium. A “shared care” arrangement allows you to switch to your spouse’s policy when you’re term limit has been reached. Discuss this option with your spouse and agent to ensure that it’s a viable option for you both.