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Long-Term Care Insurance Can Help Protect Your Assets, Independence
By Allan H. Carney, WMS™
You have health insurance in case you get sick, and you have life insurance to protect the people you love when you are gone. But what if you need long-term care?
Approximately 70 percent of Americans turning 65 will need long-term care at some point in their lives, according to the U.S. Department of Health and Human Services. This care can range from nursing home care to assisted living to having a home health aide to help you with things from personal care to medical care. Your need for long-term care can be the result of an illness, an accident or a catastrophic medical event such as a stroke or dementia. You are more likely to need care if you are older, a woman, have a chronic health condition or live alone.
If you could not take care of yourself for a long period, how could you pay for the care you would need?
You – or your loved ones – could foot the bill on your own. But it is likely to be a hefty bill. Care in a nursing home or assisted living facility can average about $250 to $300 a day. Having a home health aide come into your home is less expensive, but it still can wipe out most people’s financial cushion fairly quickly.
If you have few financial resources, or if you spend virtually all your money on your care, Medicaid will pick up the cost. However, you could have little say over where you go and probably would end up in a state-run facility.
And if you pay the costs yourself or “spend down” to Medicare, you will not be able to provide your heirs with the security and protection you expected to be able to provide.
The solution, for many people, is long-term care insurance (LTC). Long-term care insurance 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 three basic variables:
- 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.
In addition, some policies have an inflation option, which increases the coverage to help keep up with inflation.
The cost of the coverage depends largely on these four factors. Policies that pay more, last longer, begin sooner and have inflation protection cost more than those that pay less, have a shorter time period, start later and have no inflation protection.
In addition, couples usually get a substantial discount of 25 percent to 35 percent. This includes married couples, but also 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.
In general, it is best to start looking at LTC early. We recommend that clients buy the coverage in their 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 altogether. Plus, you could have a catastrophic event, such as a stroke or accident, while you are still relatively young.
A fairly recent option is a kind of hybrid policy that combines life insurance and LTC. This product allows you to access your life insurance benefit to pay for long-term care. However, the long-term care coverage under these policies usually is not as expansive as under a traditional long-term care policy.
When you are thinking about building and preserving your wealth and providing protection for the people you love, you should consider how to protect against the cost of an extensive -- and expensive -- medical situation. At The Bensman Group, we can help walk you through your options and find a plan that works best for you and your family. Contact us at 847-572-0835 or firstname.lastname@example.org.