First, Determine if You Need Long Term Care Insurance: In reality, almost everyone needs long term care insurance. Of course, not everyone will need long term care but current statistics estimate that as much as 50% of Americans may need long term care sometime in their lifetime. If you become one of those people who need long term care, will you be able to afford up to $75,000 a year for a nursing home facility? Most people, of course, could not.
1. Inflation Protection: Get a policy that raises your long term care benefit amount automatically… the cost of a nursing home today will be much higher 20-30 years from now.
2. Variable Coverage: Make sure your policy includes coverage for not only nursing homes but home health aids, adult day care providers, and assisted living facilities so you will have a choice of care.
3. Independent Care Management: If you have a claim, the insurance company will send a representative to determine your benefit needs… make sure your policy gives you the option to have an independent licensed health care provider to manage your care and not someone working for the insurance company.
4. 70% Minimum Daily Benefit: If you need services, don’t just choose the cheapest daily benefit amount but find out what is the average daily cost of nursing homes in your area and request at least 70% of that. Also, make sure this amount is adjusted annually to reflect 70% of the current yearly amount.
Estimating Your Long Term Care Projected Costs and Insurance Premiums: Long term care costs can vary depending on what state you live in and the nursing facility or home care staff you choose. It is good to know what long term care facilities are charging in your area so you can get an idea of the benefit amount you would like for your long term care insurance policy. Genworth Financial long term care website offers an interactive map where you can scroll over your state to get an idea of current annual nursing home and assisted living costs. You can also simply pick up the phone book and call local nursing home facilities and ask them what their annual costs are.
When it comes to long term care premiums, that can vary greatly depending on the type of policy you choose, the age that you choose to start your policy, and the benefit amount. Of course the younger and healthier you are when you start your policy then the lower your premiums will be. Also, the lower your benefit amount is, then the lower your premiums will be. So, the best time to check into long term care insurance is now, before you get any older! Although it is best to try not to cut corners when choosing your long term care benefits, there are additional ways to reduce your long term care premium costs.
Where and How to Purchase Long Term Care Insurance: There are many places that you can purchase long term care insurance. Your employer may offer group long term care insurance. You can also purchase long term care insurance from individual insurance companies or agents. If you or a family member has or does work for the federal or state government then you may be able to purchase a long term care insurance policy from those sources. Also, another place to look for long term care insurance policies are associations or membership groups.
When you are ready to select your long term care insurance provider, besides just looking for the best insurance premium, you will want to take some time to research what insurance company or agent you want to choose by learning about the insurance agent or company’s financial strength.
Another important aspect of choosing your insurance agent or company is knowing if and how they will use your credit score to determine your insurance rate. Take the time to research different companies and then make a list of the providers you are interested in contacting for an insurance quote.
Answers to 4 Important Disadvantages and Misconceptions about Long Term Care Insurance
1. Group Long Term Care Insurance May be a Disadvantage for Younger Persons: If you decide to look at your employer’s long term care insurance plan and you are young and in good health, make sure you get some quotes from other individual long term care insurance companies or agents. This is because when insurance is purchased for a group, the risk is spread among the group and then an average premium is set according to the group. That means everyone is sharing in the cost. So, in reality, the older people in the group are getting a good deal while the young people, who are paying the same premiums as the older people, may be paying more than they would if they chose a policy on their own independently.
2. You Won’t Get Paid Right Away: Know what your long term care policy’s elimination period is. The elimination period is the amount of days you have to pay before your policy will pay, like a deductible. Sometimes this can be as long as 90 days, so it can really add up. Also keep in mind that a longer elimination period equals a lower premium, but before going for the cheaper premium, make sure you can afford to pay for all those days if needed.
3. Long Term Care Insurance Will Not Take the Place of Life Insurance, Health Insurance or Disability Insurance: Long term care insurance will provide help with paying for assistance in dealing with a disability or long term medical condition. You will still need to keep your life, health, and disability insurance.
4. Long Term Care Insurance is For Any Age: If you acquire a disability or long term illness at any age, your long term care insurance policy will be available to you. There is no upper age in which it kicks in.