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Long-Term Care Insurance Protects You and Your Loved Ones
By Allan H. Carney, WMS™
As the 2020 election season heats up, there is a lot of discussion about health insurance. It is important to remember that health insurance does not cover the costs of long-term care. For that you need long-term care insurance (LTC).
November is Long-Term Care Insurance Month, making it a good time to talk about this important coverage. About 70 percent of Americans turning 65 will need long-term care at some point in their lives. If you are older, a woman, have a chronic health condition or live alone, you are even more likely to need care. Long-term care includes services such as nursing home care, assisted living and home health aides. You might need care because of an illness, an accident or a catastrophic medical event such as a stroke or dementia.
You – or your loved ones – can pay for the care out of pocket, which can eat up your financial cushion quickly. If you have few financial resources to start with or if you spend down your resources on your care, Medicaid may pay for the care. That can leave you with little control over what kind of care you receive. If you pay the costs yourself or “spend down” to Medicaid, you will not be able to provide your heirs with the security and protection you had planned.
The solution, for many people, is long-term care insurance, which helps protect both your independence and your assets from the costs of an extended medical issue.
There are several different types of LTC policies, but all have four basic variables:
The cost of the coverage depends largely on these four factors. In addition, couples usually get a substantial discount of 25 percent to 35 percent. This includes married couples, but it also can include two adults from the same generation, such as an unmarried couple or siblings who share an asset, such as a house, a car, a bank account, etc.
- The benefit period, or how long the coverage lasts.
- The benefit amount, or how much the policy pays.
- The waiting period, or how long before the coverage kicks in. Most policies have a waiting period of 90 days, although it is possible to have a shorter or longer waiting period.
- An inflation option, which increases the coverage to help keep up with inflation. This is usually recommended.
It is best to start looking at LTC early, no later than your mid-50s to 60s. If you wait, your health could decline so that you could end up paying more in premium – or even being declined for coverage. You could even have a catastrophic event, such as a stroke or accident, which could prevent you from obtaining coverage.
Another option is a hybrid policy. This is a life insurance policy with a long-term care rider. These policies vary from one life insurance company to another, but in general, they provide a pool of funds that can be used to pay long-term care expenses. Any funds in the pool that are not accessed for long-term care during the lifetime of the insured person become a death benefit payable to the listed beneficiary. These hybrid policies usually have a higher premium cost than a traditional long-term care policy.
Long-term care coverage is a way to help provide for your own care as you age and preserve your legacy for the people you love. The Bensman Group can help you understand the options and find a solution that works best for you and your family. Contact us at 847-572-0835 or firstname.lastname@example.org.