What Do I Need to Know About Long-Term Care Insurance?

What Do I Need to Know About Long-Term Care Insurance?

Only 7.2 million Americans have long-term care insurance. This covers many of the costs of a nursing home, assisted living or in-home care that aren’t covered by Medicare. AARP’s article “5 Things You SHOULD Know About Long-Term Care Insurance” gives you a great look at what you need to know about LTC insurance today.

  1. Traditional policies are used less. For years, long-term care insurance meant paying an annual premium for financial assistance, if you require help with day-to-day activities. However, typical terms now include a daily benefit of $160 for nursing home coverage, a waiting period of about three months before insurance starts and a limit of three years’ worth of coverage.
  2. Even if you don’t need insurance, you need a plan. Premiums for LTC policies average about $2,700 a year, which puts the coverage out of reach for many Americans. Plan for this possible expense, by looking at other ways to pay for it.
  3. A new kind of insurance. As traditional LTC insurance is used less, another policy is growing in stature: it’s whole life insurance that allows you to draw from the death benefit for long-term care. Unlike the older types of LTC insurance, these “hybrid” policies will return money to your heirs, even if you don’t end up needing long-term care. There’s no risk of a rate hike, because you lock in your premium upfront. If you’re older or have health problems, you may be more likely to qualify.
  4. Basic policies are less expensive. If all you want is cost-effective coverage, traditional LTC insurance has the advantage because hybrid policies are usually two to three times more expensive than traditional insurance, for the same long-term care benefits.
  5. Get going on this. Begin looking in your 50s or early 60s—before premiums rise dramatically, or your health disqualifies you from coverage.

Speak with your Estate Planning Attorney about Long-Term Care Insurance.

Reference: AARP (March 1, 2018) “5 Things You SHOULD Know About Long-Term Care Insurance”