What You Need To Know About Long Term Care Insurance

Posted on March 9, 2011

When you’re middle-aged and healthy, it’s hard to imagine that one day you might not be in the best of health…

Often that realization comes when you’re dealing with aging parents…

The very things you encounter in helping Mom and/or Dad before, during and after an illness will be the same for you and your children.

One way to make the process of going from independent living to dependence a bit easier for everyone involved is to purchase long term care insurance to help pay for your care if you need assistance.

Think about these issues before you buy any long term care insurance policy:

1.         Have a clear picture of what you need.

If you plan to live where you are now, do your homework on long term care costs in your area. Go online (or have your children go online) and search by state and metropolitan     areas and get the average cost for long term care for your city and state.  Call some of the long term care facilities in your area and find out what they charge and what they offer.  Call several because the costs can vary significantly even in a small city or town.

2.         Cover every scenario possible.

Don’t buy a policy that doesn’t cover a wide range of long term care scenarios.  Make sure it provides for not only nursing home or assisted living care, but also covers home health care or even adult day care services.  Even if you want to stay in your home and be cared for, don’t buy a policy that only provides for in-home care.  It won’t cover expenses for a nursing home or assisted living facility if you suffer some illness or accident that makes it impossible for you to remain in your home.

3.         Plan for inflation.

Only purchase a plan if it allows for protection against inflation of at least 5% compounded.  The cost of nursing home care is growing at a minimum of 5% and no one can predict where it will by the time you need coverage.  If you don’t plan for inflation, your policy may only pay at current costs and that won’t help you twenty years from now.

4.         Pay for the elimination period.

The elimination period in long term care policies is the period of time between a qualifying event (the accident or illness that makes it impossible for your to care for yourself) and the time when your coverage kicks in.  If you can possibly cover expenses during that time period, do it. You may be able to negotiate a lower premium by covering those costs.

5.         Pay close attention to assisted living coverage.

Nursing home care coverage in long term care insurance policies is fairly standard; however, assisted living coverage can vary significantly between policies.  Read this portion of any policy very carefully.  Make sure you understand what the policy covers and the types of care that will incur additional charges (i.e., if you have to pay more for medication management, if the policy only provides for care for a certain number of hours every week, does it only cover day-to-day care and not provide for care if you become seriously ill, etc.). If you’re not sure you understand what the policy covers, ask an attorney familiar with long term care insurance policies to review and explain it.

6.         Use a reputable insurance company.

Don’t buy a long term care insurance policy from any company without looking at their credentials and experience first.  You can research each company you’re considering by checking with insurance rating companies like A.M. Best.  Once you’ve narrowed the list, contact your state’s insurance department and make sure they are licensed to do business in your state.  Ask your state insurance department how often they raise their premiums and if they have any complaints against them for non-payment or slow payment of claims.

Long term care insurance may be a good option for you but it may not suit your anticipated needs.  Talk to an experienced estate planning attorney before you invest in any long term care policy.

I can help.

Call me to schedule your Family Wealth Planning Session today.  A Family Wealth Planning Session is normally $750, but this month I’ve made space for the next two people who mention this blog post to have a complete planning session with me at no charge.  Call today and mention this blog post.

 

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