Long Term Care Insurance

Long term care insurance provides cash to pay for your care when you reach a point in life when you cannot take care of yourself and must depend upon others.  The care can be home healthcare, assisted living or nursing home care.  Long term care is not inexpensive.  Depending on where you live it can run from a low of $40,000 to $150,000 a year after tax.  Long term care insurance transfers this risk to an insurance company and puts a firewall around your financial assets.

Long term care is not just for the elderly.  Nearly 40% of people needing long term care are between the ages of 18 and 54.   The U.S. Department of Health and Human Services reported in 2008 that nearly 70% of all people age 65 and older will need some long term care before they die.  In 2008 American insurance companies paid out $8.5 billion in claims for over 180,000 policyholders.

Long term care insurance is important because today people don’t die of the types of illnesses that likely would have killed them in the ‘good old days’.  Alzheimer’s disease is increasing because people are living longer.  Long term care insurance enables one to maintain independence and preserve their assets.  With families living all over the country it is difficult for them to care for loved ones.

Long term care is simply assistance with day to day activities: getting in and out of bed, using the toilet, bathing, dressing, eating, and providing a self environment for those with dementia and Alzheimer’s disease.  Long term care is delivered in one’s home, in assisted living facilities, adult daycare centers and in nursing homes.

  • Protect Your Family
    The main reason for interest in long term care insurance is that adults do not want to obligate their children to provide their care.  Long term care is really a family problem not an individual problem.  For example, people go into nursing homes when the caregivers get overwhelmed and exhausted and are no longer able to provide care in the home.  Children will take care of their parents however long term care insurance provides a way to make this care easier.
  • Receive a Cash Benefit
    Long term care insurance is a cash benefit.  It reimburses for expenses.  The type of care is selected by the insured and the family not the insurance company.
  • Protect Your Assets
    Long term care insurance helps make sure that you’ll have access to high quality care should you ever need it. Using insurance to pay for care also means that you won’t need to choose between getting the assistance you need and spending down your life’s savings.

Who Needs Long Term Care Insurance?

Who will care for you when you can’t care for yourself? Chances are the day will come when you won’t be able to manage on your own. In fact, almost 70% of those over age 65 will require some form of long term care insurance. So in short, anyone can benefit from having the piece of mind that comes with long term care insurance.

Long term care includes all the assistance you will need with daily living tasks if a chronic illness or disability leaves you unable to care for yourself for an extended period of time. It could be care in your home or a specialized facility.

Cost of Long Term Care Insurance

The cost of insurance is based upon five factors:

  • Demographics
    Age, health, tobacco use and family status.  Companies give a discount to married people and to couples living in a committed relationship.
  • Benefit Amount
    Benefits can be daily ($200 per day for example) or monthly ($4000 per month).
  • Maximum Benefit
    These maximum benefits can run from as low as $50,000 to an unlimited benefit.
  • Elimination Period
    Like all policies (except for life insurance) there is a waiting period between the onset of the claim and when benefits start to accrue.  The longer this elimination period, the lower the premiums.  The elimination period can be none-benefits start immediately to as long as a year.
  • Automatic Increase
    The benefit one purchases today can be adequate today but may not be needed for many years.  The automatic increase benefit will raise the benefit, not the premium, every year.  Benefit increases are available from 3% to 5%.

Many optional riders are available so one may customize the coverage to one’s specific needs and premium needs.  Policies are available on a limited payment basis where the policy may be paid up in as little as ten years.  Several companies have policies which can be paid in a single premium.

Wouldn’t Medicare Pay for My Care?

Many people think their private health insurance or Medicare would pay, but that’s not typically true. Health insurance really only pays for doctor and hospital bills. Medicare will cover skilled care for periods up to 100 days, but only if certain requirements are met. If you need care over an extended period of time, you’d have to spend down your assets before Medicaid would kick in, and then, you’d have less choice about the care you receive.

When to Buy Long Term Care Insurance

The best time to purchase the coverage is when young and healthy.  The premiums are most affordable and it is simple to qualify.  Premiums may be paid by one’s business and benefits will be tax free.  The deductibility will vary depending on the type of business (corporation, proprietorship etc) and the age of the insured.

There are four major risks to one’s life savings:

  • Car Accident 1 chance in 200.
  • Home Fire 1 chance in 240.
  • Hospitalization 1 chance in 15.
  • Long Term Care 1 chance in 2; however over age 65 it is 7 out of 10.

For more information about long term care insurance or to request a quote, contact Set for Life Insurance today!

Are you ready? Get set - for life!

Dr. C. Mirshab, Anesthesiologist, Denver, CO

Ever since completion of my medical residency, Set for Life Insurance has been a tremendous help and resource with my disability insurance needs. They are readily accessible and inform me on any updates as they happen.  I feel comfortable that I am getting excellent advice and accurate information.