Long term care insurance is a financial protection that many Americans will need in the future but few are willing to invest in or are able to purchase. Sometimes those who are interested and able to buy find out that, unfortunately, they are no longer eligible or insurable due to a pre-existing health condition.
This type of private insurance is definitely not for everybody. It may work for some people but may be unnecessary for others. If a person has, for example, savings or assets worth $2 million or more, he can probably pay for the care he’ll need just out of his own pocket. On the other hand, someone who has limited resources may not be able to shoulder the costly premiums for this type of coverage and would have better chances of seeking Medicaid assistance.
These are just a few things to consider when thinking about buying long term care insurance. Policies have become complex and much more flexible over the years, and there are also a lot of important, tiny details within these policies that affect the insured person’s benefits come redemption time.
Since long term care insurance is a highly specialized industry, it takes a knowledgeable and experienced insurance adviser to determine which policy is right for someone. In the meantime, here are some questions that will help you understand the complexities and features of long term care insurance.
What is Long Term Care Insurance For?
Long term care insurance is primarily for the elderly who, due to old age or chronic illness, need some form of assistance in order to carry on with their daily activities. It is NOT medical insurance; it’s for getting the help you need for everyday life functions.
It is also for disabled people and individuals who’ve been diagnosed with a degenerative disease and may, therefore, require assistance in daily living.
What Does Long Term Care Insurance Cover?
Coverage for this type of insurance fall under three basic categories: home care setting, assisted living and stays at skilled nursing homes. An ideal policy is something that offers coverage for all three settings since you won’t really know which one you’ll end up needing.
It also covers costs of home modifications for the convenience of a disabled patient (i.e. if the patient uses a wheelchair and needs to have ramps installed) and payment for visiting caregivers and a private duty nurse.
What Happens If You Don’t Have Long Term Care Insurance?
If a person does not have long term care insurance, and gets sick, or becomes too weak to function by himself, the care he needs has to be paid through private savings and assets. Medicaid could step in, but eligibility calls for that person to have very depleted resources and practically drive himself to poverty before getting some help.
When is the Best Time To Buy a Long Term Care Policy?
As with any other type of insurance, the earlier (or younger) you buy a policy, the less expensive your premiums will be. The most ideal buying age would be in your mid-to-late 50s. People who buy at a later age, say 60-65, have greater chances of being rejected due to pre-existing health problems.
However, as stated earlier, a long term care policy is not only for the elderly. A young, 30-year-old man can be figured in an accident that leaves him disabled and requiring long term care. The point is, life-changing occurrences can take place at any age, and if you’re covered, that means you can sleep soundly at night.
How Much Will it Cost?
The cost of your long term care policy will vary depending on many factors, as mentioned, age is one of them. Others include the daily amount payout of a policy and the length (number of years) these benefits are given. You may want to consult with an expert regarding rates to get a better picture of how much you’ll need to set aside if you wish to purchase a policy.
When Can One Start Receiving Benefits?
The insured becomes eligible to receive benefits once he or she is not able to perform 2 of the 6 activities of daily living (ADLs), i.e. Eating, bathing, toileting, dressing, transferring, continence. Certain policies require the insured to be hospitalized before paying out any amount, so it is better to look for a policy without this restriction. Also, find a policy that has inflation protection—a feature that increases your benefit with inflation.