June 20, 2024
Is Long Term Care Insurance Worth It?

What does long-term care insurance cover?

Long-term care insurance generally covers services that provide the policyholder assistance with routine activities called ADLs, which include eating, bathing, dressing, using the toilet and moving in and out of bed. For a plan to pay out benefits, the insured must require help with at least two of the activities mentioned above. However, coverage details and benefit triggers may vary by plan.

 

Long-term care insurance policies may also cover assistance with instrumental activities of daily living (IADLs). These are generally more complex tasks such as grocery shopping, cooking and cleaning, managing finances and administering medication.

 

Some policies extend coverage to hospice care for individuals suffering from a terminal illness, skilled nursing care at home and even rehabilitation, occupational, speech and physical therapy. Outside of these services, LTC plans generally exclude medical expenses from coverage.

 

Advantages of long-term care insurance

Buying long-term care insurance can provide you and your family peace of mind in knowing you’ll be able to afford care later in life. It can also help protect your wealth and assets from the high costs of care.

 

Let’s go over the advantages of long-term care insurance in more detail.

 

Coverage for long-term care services

As the name implies, long-term care generally extends over multiple years, exceeding what medical and disability insurance might cover. According to the U.S. Department of Health & Human Services, about 20% of today’s 65-year-olds will require some form of care that lasts for more than five years.

Nevertheless, the cost of extended care can be prohibitive for many. According to Genworth’s Cost of Care Survey, the national median cost of a private room in a nursing home is $9,700 per month, while the cost of homemaker services and home health aides are around $5,700 and $6,300 per month respectively.

 

A long-term care insurance policy, especially one with an inflation protection option, can shield your savings against the rising costs of care and help you pay for the types of services you may require later in life.

 

Reduces the financial burden of long-term care costs

According to a research brief by Melissa Favreault from the Urban Institute and Judith Dey from the Office of the Assistant Secretary for Planning and Evaluation, about 17% percent of people who require long-term care services will spend at least six figures out of pocket on future care. Long-term insurance can help you and your loved ones shoulder some of that financial burden.

 

In order to get the most value for your money, consider purchasing long-term care insurance in your mid 50s or early 60s. The younger you are when you buy a policy, the lower your premiums. However, that does mean you’ll pay premiums for What to consider before buying long-term care insurance

Choosing the right long-term care insurance plan can be a complex decision that requires a significant financial commitment. It may also determine the quality of care you will receive when you need it most. Here are some of the most important factors to consider when choosing a policy.

 

Cost of long-term care insurance vs. health care costs

According to the American Association for Long-Term Care Insurance (AALTCI), the typical LTC-insurance policy costs about $1,200 annually for 60-year-old men and $1,960 for women of the same age. However, inflation-protection provisions, age, gender, overall health and marital status can greatly affect your premiums.

 

You will likely pay long-term care insurance premiums for several years before you end up making a claim. Alternatively, if you purchase a policy to get financial support for existing health issues that require long-term care, your premiums will likely be higher — if you can get coverage at all. In either case, you will pay a relatively large sum for quality long-term care insurance.longer.

Married individuals generally enjoy lower premiums, and your long-term care insurance policy may even be eligible for tax deductions. Your policy’s waiting or elimination period will also affect its cost. Choosing a longer elimination period will translate into lower premiums, but you’ll have to pay for long-term care services out of pocket during that time once you require care.

 

Provides relief to family members who act as caregivers

Without long-term care insurance, you could rapidly deplete your life savings, leaving you no option but to depend on family members for assistance. Even if you have health insurance, the support needed to fulfill daily tasks is significant. This can also be quite stressful for family members who act as caregivers.

What to consider before buying long-term care insurance

Choosing the right long-term care insurance plan can be a complex decision that requires a significant financial commitment. It may also determine the quality of care you will receive when you need it most. Here are some of the most important factors to consider when choosing a policy.

 

Cost of long-term care insurance vs. health care costs

According to the American Association for Long-Term Care Insurance (AALTCI), the typical LTC-insurance policy costs about $1,200 annually for 60-year-old men and $1,960 for women of the same age. However, inflation-protection provisions, age, gender, overall health and marital status can greatly affect your premiums.

You will likely pay long-term care insurance premiums for several years before you end up making a claim. Alternatively, if you purchase a policy to get financial support for existing health issues that require long-term care, your premiums will likely be higher — if you can get coverage at all. In either case, you will pay a relatively large sum for quality long-term care insurance.

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