Long-term-care insurance. It's a subject most people don't want to think about—but many people know they need to.
At first blush, policies that help pay the costs of extended nursing care make perfect sense. Bills add up quickly when you can no longer take care of yourself and your needs exceed what family and friends can provide. Nursing homes, assisted-living centers and home care all are expensive, and there is no telling for how long you may need the service. Buying a long-term-care insurance policy can be a way of making sure your future physical needs will be met. Policies designed in partnership with state governments also give individuals and their families a way to protect savings in the event of burdensome care costs that stretch on for years.
The biggest misconception is that Medicare covers long-term care. It does not. Medicaid, meanwhile, pays for various kinds and amounts of long-term-care services and support—for the poor. But many states are cutting back on Medicaid benefits, and access to good care is always uncertain.
What about consumers with midlevel savings—in other words, most people? These consumers need long-term-care insurance the most. They tend to have too little savings to pay for even a couple of years of care without impoverishing themselves and their families, and too much to qualify for Medicaid.
The best time to buy long-term care insurance is between ages 55 and 64. After that, health complications often hinder or even negate people’s ability to get coverage.
How Much Insurance Should You Purchase?
A number of considerations go into how much insurance any consumer should buy. In many areas of the country, nursing homes cost as much as $300 a day and assisted living facilities can cost more than half that amount. Home care can be less or more expensive, depending on the amount and level of care required.
One easy way to calculate a daily benefit is to take the average cost of care where you live or are likely to live when needing care and subtract from that your daily income. If, for instance, nursing homes cost $300 a day and your income is $3,000 a month, or $100 a day, then your daily benefit should be $200 a day. Remember: the insurance policy only covers care expenses; you will need to rely upon savings or other income sources to pay for other expenses, such as food and utilities.
The next factor is what period of time the policy covers. The shortest period of coverage available is two years. But policies can be purchased for longer periods of time or for the insured’s lifetime. Of course, the longer the policy’s coverage period, the higher the premium.
Consult With a Qualified Agent
If you are considering long-term care insurance, you need to consult with a qualified professional to determine whether you can afford this type of coverage and whether the policy you are considering meets necessary standards.
Mintco Financial Team of Independent Advisors are specialiazed in Long Term Care Insurance and will be glad to help you to understand it and analyze if it is right for you.
Neil Cavuto and Ann Romney have multiple sclerosis and may need Long Term Care in the future .
Although seniors are definitely concerned about the need for long-term care it is not high on the list of concerns. It is human nature not to worry about an event until it happens.
Concerns seniors have (Do you?):
Remaining independent in the home without intervention from others. Maintaining good health and receiving adequate health care. Having enough money for everyday needs and not outliving assets and income
Although seniors are definitely concerned about the need for long-term care it is not high on the list of concerns. It is human nature not to worry about an event until it happens. Certainly everyone is concerned about having his house burn down or having an accident or getting an illness or ending up in the hospital or needing long-term care, but these things are typically beyond our control and we can't sit around and worry about them. But people do plan for the risk of loss and typically have set money aside or bought insurance or prepared written documents to cover the unexpected.
For seniors the need for long-term care is probably the most catastrophic unexpected event that could happen. This is because the need for long-term care typically removes any level of security a senior person may have with the three major lifestyle concerns mentioned above.
No one knows why people beyond age 65 are not more concerned about preparing for long-term care. Perhaps they have seen it in their family or among friends and seen the effect that it has.
Because of the unsavory aspect of receiving long-term care, perhaps seniors prefer to ignore it rather than embrace the need for it. Perhaps they mistakenly think the government will take care of them. Or they are assured that family and friends will provide the care when needed, but don't know how difficult it really is for loved ones to provide that care when the time actually comes.
Whatever the case, without proper planning, the need for long-term care can result in the single greatest crisis in an elderly person's life.
This lack of planning will always have an adverse effect on the older person's family. It usually results in great sacrifice or financial cost on the part of the spouse or children. Or for those with no immediate family, long-term care can be a burden to extended family members.
Contact Mintco Financial and review which options you have about Long Term Care.
Mintco Financial Team has helped thousands of seniors to achieve peace of mind regarding their long term care.
Call us now for a complimentary review of your situation.
Here are some suggestions for the best coverage for your money when we talk about Long Term Care Insurance:
Elimination period/deductibles
Avoid very low deductibles or elimination periods (EP), since lower deductibles have a much higher premium cost. Also, Medicare and a Medicare supplement policy may help defray the cost up to 100 days at the start of a long-term care (LTC) episode. That coverage often counts toward satisfying the elimination period.
Recommend calendar-day EP over service-day EP.
Benefit length
Avoid unlimited and very long benefit lengths. The best option is a 5-year policy.
Concerning limited versus unlimited or lifetime coverage, based on buying at age 55, unlimited costs 40% more, on average, than 5 years of coverage.
Over 90% of chronic LTC episodes will be fully covered by a policy offering 5 years of benefits.
A 5year policy usually lasts longer than 5 years of use. The reason is that policies use the benefit pool or pot of money concept. The unused daily benefit is carried over for future use.
If your client is very concerned about a 20-year Alzheimer’s episode, you can recommend longer coverage terms, shared care riders, higher daily benefits, or a state’s LTC Partnership program.
Other ways to prolong the life of the policy and/or reduce costs
Shared care is often more cost effective than unlimited. But depending on the company, the additional cost can run from 10% to 22% for that rider. That is still less expensive than unlimited coverage.
Use a higher daily benefit amount to expand the useful life of the policy
Consider a state’s Partnership policy, especially in New York where unlimited asset protection is available.
Avoid almost all other riders (i.e., survivorship, non-forfeiture, return of premium, etc.). They are expensive add-ons that may do nothing to enhance coverage.
Encourage annualpremium payment modes (especially at today’s interest rates).
The facts of a case will affect the analysis; I personally prefer a lifetime benefit length if there is a history of Alzheimer’s in the family, and particularly if the client is female. But it's good to recognize that benefits that are perfect for some may be less important to others.
