Understanding Long-Term Care Insurance
Long-term care (LTC) can be costly, making it challenging to figure out how best to cover its expenses. Read up on different forms of LTC coverage available and which features might suit you best before making your decision.
As neither standard health insurance or Medicare supplemental coverage will cover long-term care expenses, it’s crucial that individuals plan ahead and consider purchasing long-term care insurance.
What Is Long-Term Care Insurance?
Long-term care insurance provides an effective means of covering extended long-term care services without draining life savings. An increasing number of people are turning to these policies as a way of covering potential high costs associated with future care needs. When buying such an arrangement, however, one needs to carefully navigate costs, coverage options and features available so as to find protection tailored to each unique circumstance.
Policies typically offer coverage for personal and custodial services provided in home or community settings up to a pre-selected limit, nursing homes and assisted living communities as well as costs associated with care in nursing homes or assisted living communities. Some policies include an elimination period of 30, 60 or 90 days where policyholders must cover their own care expenses before receiving reimbursement from insurance.
Insurance companies provide both standalone long-term care policies as well as hybrid policies that incorporate long-term care benefits into traditional life insurance plans. While hybrid policies tend to be more expensive, they provide peace of mind knowing a significant portion of funeral and other final expenses are covered if long-term care becomes necessary in the future.
At an earlier age, purchasing long term care insurance is vital because the older one becomes when purchasing, the higher their annual premiums will become. Furthermore, most individual policies require medical underwriting in order to qualify while some employer and association group plans may not.
What Is Long-Term Care Insurance Coverage?
Long term care insurance provides financial support to help cover in-home or residential long term care services, such as personal care, home health aide services, adult day care services, speech, physical or occupational therapy services, respite care and hospice care. Some people purchase stand-alone long term care policies while others select life policies with combined long term care benefits and death benefits.
When applying for a long-term care policy, you’ll select a period – typically two years up to lifelong. Additionally, you will set out the maximum daily benefit amount you expect your insurer to cover; some long term care policies offer options to increase that benefit amount for an additional cost and help keep up with rising expenses.
Early purchasing of long-term care policies typically leads to lower premiums, as insurers are less likely to assume you’ll experience medical events or health concerns that prevent coverage in later life.
If you’re thinking about purchasing long-term care coverage, purchasing it between 40-50 could help reduce premiums while providing more options for paying costs in the future.
How Does Long-Term Care Insurance Work?
Long-term care insurance provides policyholders with reimbursement of part of the costs incurred when receiving assistance with daily activities like bathing, eating and dressing. Most policies offer daily benefits up to an established maximum number of days but may also offer other features like death benefits or premium refunds.
An individual long-term care insurance policy generally involves medical underwriting and an elimination period before coverage begins. Furthermore, some standalone policies include inflation protection that automatically adjusts coverage amounts over time to keep pace with rising costs.
Long-term care insurance policies are available from both life insurance companies and independent agents, while your employer may also offer group rates. When shopping around for long-term care policies, gather multiple quotes so you can compare coverages and premiums and find the best possible price.
Purchase of long-term care insurance policies early can reduce future premium costs; many policies offer guaranteed level premiums which won’t change during their duration of contract. Although, in rare cases they could increase due to circumstances outside your control; any increases must first be approved by your state’s Department of Insurance before being implemented.
How Can I Get Long-Term Care Insurance?
Long-term care insurance can be purchased in various ways. Direct purchases or agent commissions may be an option; some employers offer group benefit plans with this coverage included as an employee benefit option; or it could even be available through trade or professional associations.
Long-term care insurance policies generally require you to meet specific health requirements before they will provide cover. Most insurers require your medical history as part of this assessment process and might request either a phone interview or in-person assessment session with them. You can improve your chances of qualifying by improving your overall health and taking steps to combat risks such as diabetes or arthritis.
As part of your financial and medical planning, it’s important to assess your family medical history and potential hereditary conditions that increase the chance of needing long-term care services. Furthermore, long-term care policies typically cover only a portion of total costs related to long-term care needs.
New long-term care policies often come equipped with features to help adjust for rising costs, including inflation protection which increases daily benefits and/or the maximum policy benefit by an amount each year; others allow you to choose to increase either premiums or inflation protection at any time; most individual long-term care policies are guaranteed renewable, meaning your insurer cannot cancel them until either you stop making payments or breach the terms of the contract.