Long Term Care Insurance

What is Long Term Care Insurance?

  • Long Term Care Insurance provides a benefit for your long-term care as you age.  Long term care is the care you need when you cannot perform your activities of daily living (ADL’s).  There are six ADLs associated with long term care.  They are bathing, dressing, eating, transferring, toileting and continence.  Usually, your long-term care insurance kicks in after you cannot perform two ADL’s or memory care issues. 
  • The nice thing about long term care policies is that you can choose specific benefits that you may want such as in home care.  When you go on claim, you can also use these when in assisted living communities.  It is not just for nursing home care.  

Do I Need Long Term Care Insurance?

  • Maybe.  Every situation is different.  Most people start thinking about this around their age 50 or so. 
  • According to the Administration of Community Living, someone turning 65 today has almost a 70% chance of needing some type of long-term care service1
  • Medicare does not cover long term care.

What types of policies are available?

  • Traditional policies are the ones that you pay a premium every year until you either go on claim or you pass away.  These policies have gotten awfully expensive, and your premium is not guaranteed.  
  • Hybrid policies are life insurance policies that have a long-term care rider.  These often involve a large upfront sum of money or you can spread the premium out over a certain number of years. You have a pool of long-term care benefit that is available.  It also has a life insurance component with a death benefit.   If you do not use the long-term care benefit, then your heirs will receive a higher death benefit amount.

Long Term Care Tips

  • Get an inflation rider so that your benefit increases as costs increase.
  • This is a good resource to see what the cost of care is in your area:  https://www.genworth.com/aging-and-you/finances/cost-of-care.html
  • If you get a premium increase on your policy, the options that the insurance company gives you are not the only options available.  Oftentimes, they want you to drop the inflation rider instead of your monthly benefit.  You can call them and get prices for other options. 
  • Many people do not realize they are eligible to claim on their policies.  When facing a health issue that will last longer than your elimination period, do not forget to look at the details of your policy so that you can get some help.
  • Make sure your adult children know about your policy as they are ones likely to be calling in a claim.
  • You may be able to claim a state tax deduction for your long-term care premiums.  

1https://acl.gov/ltc/basic-needs/how-much-care-will-you-need

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