Plan Ahead: Long Term Care Insurance

a stethoscope on the the table with forms for Long-Term Care insurance

No one wants to think about being unable to care for themselves in old age. But according to the U.S. Department of Health and Human Services, approximately 70% of all adults over the age of 65 will need some type of long term care. Long term care insurance can help pay for the expense of this needed care.   It can be pricey to purchase, but it will pay off if you are among the 70% who will need to use it. Long term care insurance should be considered when determining your retirement plan.

What is long term care insurance?

Long term care insurance is different than traditional health insurance. It is designed to cover the costs of services and support when you can no longer care for yourself, whether that is in your home, at an assisted living community, memory care community, respite care, hospice care, or in a nursing home. The policyholder can select from a range of care options and benefits. Services can include caring for the activities of daily living such as bathing, toileting, and dressing, or skilled nursing, or occupational, speech or physical therapy.   Long term care insurance typically covers what is not covered by health insurance, Medicare or Medicaid.

What are the costs?

Depending on the policy that you purchase, long term care insurance can range from between $3,000 to $6,000 per year. But this annual cost depends on multiple factors such as the age when you purchase it, sex, health status, maximum daily benefit, length of benefits, and waiting period.

You can keep down the cost of long term care insurance by purchasing your policy when you are in your early 50’s and in good health. If you were to wait 20 years and buy a policy in your 70’s, you may pay up to three times as much. Also, if you are in poor health, you may not qualify.

What factors should I consider if I want to purchase long term care insurance?

  • Speak with your financial adviser. Look at long term care insurance as part of your financial planning for retirement. It is best to weigh the cost and benefits with your financial goals. It can help to protect your family’s financial future and your savings and investments.
  • Compare policies.   The policies can be complex and vary greatly. How many years are covered? What is the daily coverage? Does it provide inflation protection? What type of care is covered? Do they offer a shared benefit package for couples? You will need to research and compare what options will best fit your circumstances.
  • Do your research. Understand and research the companies that you may be buying a policy from. Many companies have left the market in recent years, so it best to do your research. It is most important to ask for the premium rate history for each company that you research.
  • Can you afford a policy? If you stop paying your premium, your policy will no longer be in force and what you have paid into it will be lost.   As your income decreases, will you still be able to pay for this policy?
  • Apply sooner rather than later. The best time to buy is if you are under the age of 65 and in good health.
  • Family history. It is difficult to judge whether you will need this insurance in the future but reviewing your family history may give you some insight to predict your odds.
  • The impact of long term care. Consider the consequences to your spouse and children if something were to happen and you needed ongoing care. Long term care insurance can alleviate this financial and emotional burden on your family and allow you to get professional assistance to improve your quality of life.

Buying a long term care insurance policy is a way to give you and your family peace of mind and ensure that your future care needs are met.

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