Long Term Care Insurance Answers.
Besides paying out of your own pocket you can purchase long-term care insurance. This insurance must be purchased prior to needing long-term care. The eligibility for the insurance is based on your current health. Therefore if you are already ill, you probably will not be insurable.
Most financial planners recommend that LTC insurance be purchased in your late 50's or early 60's. In this range the cost is quite affordable and your health is probably still pretty good. The premiums are based on your age, health, and the type of plan that you purchase.
When purchasing LTC Insurance you must make three main decisions:
Daily Benefit - the amount of money you will receive from the insurance company on a daily basis for your care. You usually can select between $50 and $250 per day. Find out what the current cost of care is in your area and it will help you make the decision as to what daily benefit you want. (also see inflation protection below).
Benefit Period - the length of time you will receive payments from the insurance company once you need care. You usually can select a specific number of years (2,3,4,5,) or lifetime plans are also available. The average length of stay in a nursing home is 2 1/2 to 3 years. Note: A three year plan will be less expensive than a lifetime plan.
Elimination Period (deductible) - the number of days that you will be responsible for paying for your care before the insurance begins to pay. This works like most insurance deductibles except it is stated in a number of days instead of dollars. Most plans have a variety of options like 0 days, 20 days, 60 days, or 100 days. Be sure to check if this deductible is once in a lifetime or if it can repeat.
Also, there are three optional decisions that can be added to your plan.:
Inflation Protection - this ties back to your daily benefit and allows it to grow on an annual basis to help keep your plan in step with inflation. It is built into your original premium and therefore will increase your annual premium. You may have choices of 5% simple or 5% compounded. You do not have to add this to your plan - but it is certainly recommended if you are younger when you buy your policy.
Home Health Care Coverage - some policies will also give you the option of receiving insurance benefits in your own home. This options will allow you greater choice as to where your care can be paid for by the insurance. It may cover community care like Adult Day Care Centers and Assisted Living Facilities as well as care in the home. This option will increase your premium.
Nonforfeiture - this option provides some form of paid-up benefit if the policy should lapse. This option increases your base premium.
I hope this will give you some direction when comparing LTC policies. Always look for a strong and reputable company and also make sure your agent is knowledgeable about long-term care issues as well. Shop around and educate yourself and use your best judgment when selecting a plan. Look for plans that are Tax Qualified.
To receive a quote for long-term care insurance call the following toll free number.
Long Term Care Insurance Division of National HealthCare Corporation,
They are licensed with a number of companies and based on your age, current health condition and the type of plan you want they can send a quote.
Special thanks to Stacia Vetter of National HealthCare Corporation for providing the information on this web page!