Long Term Care Insurance



               

Long Term Care Information

As our lifespans are extended, our family structures change and medical care improves, the need for long-term care will continue to increase. A great number of people over 65 will spend some time in a nursing home, assisted living or extended care facility. The cost of such care can quickly erode the assets of even the most well-prepared savers. The risk of outliving your money in this situation can be great, and one of the best ways to transfer this risk is to purchase long term care. 

Long-term care (LTC) is defined as a need for assistance with some of the activities of daily living (often called ADLs). ADLs include functions that most of us perform each day, like eating, bathing, using the bathroom, dressing, transferring and maintaining continence. The need for assistance may be due to physical inability or mental impairment, such as memory loss, Alzheimer's or dementia.

The reason to buy long term care insurance is to protect your assets in case you need to pay for assisted living, home care or a nursing home stay. Long-term care insurance helps you pay for these services, which can be very expensive and, over time, can be financially devastating. A policy also ensures that you can make your own choices about what long-term care services you receive and where you receive them in advance.


Like other types of insurance policies, the cost of insurance coverage depends on the specifics of that coverage. Several factors can influence how much a policy may cost the insurer, including the place in which the care is received, the reason for care or severity of the patient/insured's condition, the geographic location of the care, the daily benefit amount, the elimination period, the time frame in which benefits will be paid, etc. 

Who Needs It?
You may never need long-term care. But one thing is for sure: the need for care assistance dramatically increases after age 65. One study from the U.S. Department of Health and Human Services reveals that one in four people turning age 65 will spend one year or longer in a nursing home.

Types of Policies
There are a few types of policies available for consumers today. Some are known as "indemnity", "expense incurred", or "cash" policies. Indemnity plans are also called "per diem" policies that pay up to a fixed benefit amount regardless of what you spend (ie. you may spend more or less than the policy covers). Expense-incurred policies reimburse you for actual expenses incurred up to your fixed benefit amount, as defined by the daily benefit you purchased with the policy. With a cash-based policy, as long as the policy gets triggered by the ADLs, you will not be required to incur expenses to receive the benefits of your claim.

Final Considerations
The purchase of LTC insurance should not be a stand-alone decision and must be incorporated with all other planning. When considering the purchase of an LTC policy, you may wish to consider purchasing optional benefits