We insure our homes, our cars, our earning power, even our lives. Now we have the ability to insure ourselves against the huge costs that can be incurred if we need long-term care during our lives. Long-Term Care (LTC) insurance is something that everyone consider, but separate the fear from the facts and be an informed consumer.
What is your Likelihood of Wanting Care?
Statistics abound of those who will spend “some time” in a nursing home, often ignoring the length of stay involved. The financial cost depends on how long and at what level of care. But also consider your family health and longevity, what caregiver resources you have (spouse or children), whether you want to depend on those, and in what setting you would prefer to be cared for. Consider whether family would insist on your moving in with them, or whether you would rather move to Mars before doing so. First determine your goals, then plan your resources to be able to afford to live in the setting you would prefer.
To Not Insure is to Self Insure.
There are three basic ways to pay for LTC expenses. If you have enough investment assets and outside sources of income, you could plan to pay for any care you need out of your own resources, referred to as “self-insuring.” However, if your goals are to leave your assets to your heirs or charity, or a spouse may need those assets for care or living expenses, you may want to consider a private LTC Insurance policy. The third option occurs when insurance is beyond your reach financially, and you plan to use up (“spend down”) your assets and fall back on Medicaid. Work with your financial advisor to assess which of these three fits your financial circumstances and personal goals. As a generalization, if your investment assets (not including your house) are in the $250,000 to $750,000 range, you might want to consider long-term care insurance. Note: Medicare is not one of the three. Medicare is health insurance, and will only cover very specific LTC situations.
Finding the Long-Term Care Policy That is Right for You.
If your goals, non-financial and financial resources, show that LTC insurance is a desirable or necessary, then you are ready to consider the various policies that are available. Don’t just ask for quotes. Start with a study of the features available in LTC policies, to decide which ones are important to you. Also, it is usually recommended that you consider only financially-strong insurers who are assigned one of the two highest possible ratings from at least two of the four major rating agencies.
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In addition to your age and general health, an insurer will need to know six things to generate a quote: amount of dollar benefit per day for nursing home care, how long the benefits should continue, the same two details for in-home care, how long you want to wait before benefits start (like a deductible), and if you want the protection to increase to keep up with inflation. Compare what extra benefits you are getting for the cost. Some are very valuable; some are fluff. Prices all too high? Consider cutting back on the coverage so you are partly self-insured. Keep in mind, this is insurance protection against a medical event that could lead to a financial disaster, not an investment. A good agent will work with you to be sure you get the policy that you want and can afford. Let your personal needs and goals be your guide!
