Long-term care insurance provides financial protection for individuals who need long-term care services either in their homes or in a medical institution. This type of insurance protects costs not covered by health insurance or other government healthcare programs. The insurance covers people who are not sick in the traditional sense, and hence do not need hospitalization, but are unable to perform daily functions on their own such as bathing, eating, dressing, walking etc. referred to as Activities of Daily Living (ADLs). With life spans increasing, the need for long-term care insurance has become more evident.
Benefits of Long-Term Care Insurance
Many people underestimate the risk of a chronic illness or disability and have no plan in place to financially cope with the long-term effects of such illnesses. According to the American Association for Long-Term Care Insurance (AALTCI), about 12 million older Americans will require long-term care services by the year 2020. Nearly two-thirds of people over the age of 65 will need some type of long-term care during this life span.
Long-term care insurance was considered a product mainly for the elderly, but today experts encourage people to consider long-term care along with other typical insurance policies such as term or disability insurance. Starting an early plan to protect yourself against the financial loss of a chronic illness or disability will not only cost less but earn you a potentially higher payback. According to the American Health Care Association, which is an association of 50 state health organizations that represent assisted living, nursing facility and long term care, the best time to purchase long-term care insurance is when you are in the age bracket of 50 to 55.
Statistics show that 40 percent of the people currently receiving the services of long-term care are in the age group of 18 to 64, according to the U.S. Department of Health and Human Services National Clearinghouse for Long-Term Care Information (October 2008). These people may have had an accident, a stroke, or developed multiple sclerosis or suffer from any other type of debilitating illness.
According to the AALTCI, about 980,000 women and 337,000 men over the age of 65 are currently residing in nursing homes showing that more women than men are likely to be the recipients of healthcare services. Women account for nearly two-thirds of the $6.0 billion in annual benefit dollars paid through long-term care insurance. Experts say that women should investigate long-term care insurance options when they reach their 50s.
Tips on Purchasing Long-Term Care Insurance
As with all life insurance policies, purchasing long-term care insurance will be cheaper if you purchase it when you are young. You might want to compare the price difference in premium payments and the payback it offers at different ages, say purchasing at the age of 45, 50 or 55. You may find that the lifetime expense of purchasing a long-term care insurance policy is much lower when you purchase it 10 or 20 years earlier because the premiums are that much cheaper!
Long-term care will cover home care, assisted living, hospice care, nursing home, adult daycare, respire care, and facilities for those with Alzheimer’s disease. Home care includes a visit or live-in caregiver, companion, housekeeper, therapist or a private nurse 24 x 7. Long-term care cover may also include out-of-pocket expenses. Premiums that are paid towards long-term care insurance may be eligible for income tax deduction.
When purchasing long-term care insurance, make sure you choose a carrier that has a solid financial integrity and excellent ratings from financial rating institutes such as A.M. Best, or Standards & Poor’s. You’ll need to consider the amount of coverage, whether you need long-term home or community care services, and how long you would want these benefits to last. You would also have to consider whether you would want to have a waiting period, which is similar to a deductible. All these factors would determine your premium rating.
Final Thoughts
Once health declines with the inevitable passing of time, you may become ineligible for long-term care insurance. The chances of developing a pre-existing health condition are just that much higher and would bar you from getting long-term care insurance coverage. Different companies have different underwriting systems, but with rising age-related health complications, it generally becomes harder to find long term care insurance at an affordable premium the longer you wait. The smart thing to do would be to search for the cheapest policy when you reach the age of 50 and lock in those rates for your entire life.
The content on this page is provided by Accuquote, a leader in providing term life quotes to people across the United States.
