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If you get hurt or sick and need to stay in a care facility, can you afford to
pay several hundred dollars a week if your recuperation takes months? For many
of us, the answer is no. However, there is a type of insurance for just that
purpose. It's called long term care insurance (LTC). It covers the daily costs
of a nursing home or in-home care in the event that you are unable to care for
yourself. Experts say about half of us will need some type of LTC for 90 days or
more before we die. Unfortunately, regular health insurance will not pay for
this type of care. Before you purchase a policy, you should ask the following
questions:
What Type Policy Should I Buy?
A reimbursement policy pays your long term care costs up to the amount of your
daily benefit. If you have a maximum daily benefit of $150; and nursing home costs
of $100 per day, you'll be reimbursed for the $100 you spent.
An indemnity policy pays your maximum daily benefit regardless of what your care
costs. The typical annual premium would be about 20% to 40% higher than the premium
for a reimbursement policy. For most people, the extra expense isn't worth it. It
might make sense if you have a relative who is planning to care for you and who
is also a licensed caregiver; such as a registered nurse. Some indemnity policies
will pay a licensed relative for your care, while reimbursement policies will not.
How Much Coverage Should I Buy?
Benefits for long term care policies range from $50 to $500 a day. You should
choose the amount of coverage depending upon your expected costs. Before making
a decision, research the costs of nursing homes and in-home care where you live
as prices will vary.
How Much Will A Policy Cost?
Your annual premium depends on factors such as your age, the benefit period,
the elimination period, whether it is an indemnity policy or reimbursement policy
and whether or not the policy has inflation protection.
What Is The Benefit Period?
Your benefit period states how long the policy will cover you. It can range from
one year to a lifetime. Less than 8% of all long term care claims extend past three
years, according to a recent study. But, if you come from a family with a history
of dementia or Alzheimer's disease, you may wish to select a longer benefit period.
What Is The Elimination Period?
Most long term care policies have an elimination period, commonly known as a
waiting period before benefits actually start. It can last between 30 and 180 days
during which time you're responsible for paying your costs out of pocket. A longer
elimination period will lower your premium. First determine how long you think you
can afford to pay for care before your benefits start.
How Do I Become Eligible?
Typically, you're eligible when you can't perform two of the six basic activities
of daily living, such as bathing and dressing yourself. You can also be eligible
if you're diagnosed with a cognitive impairment. Read the fine print of your policy
carefully because all policies have varying requirements.
What Is Inflation Protection?
Because long term care policies are generally purchased many years before the
benefit is actually needed, inflation can cut the benefit purchasing dollar in half.
Buying a policy with an inflation protection of 3% to 5% will increase the premium,
but it also will increase your daily benefit so that it keeps in step with inflation.
Where Am I Covered For Care?
Some policies cover care only in nursing homes, others only in your home. A comprehensive
policy may also cover assisted living or custodial care in non-nursing facilities.
At the very least, choose a policy that offers both nursing home-care and in-home
care coverage. Very few people want to stay in a nursing home if they don't have
to.
How Do I Get Started?
Just visit the “No Obligation Quote” page on our website and provide some basic
information. We work with a firm that specializes exclusively with long term care
policies and can help you choose the best company at the best price to fit your
individual needs.
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