What is Long-Term Care Insurance?
Long-Term Care insurance pays for or assists in paying for care for someone with a prolonged physical illness, or disability or a cognitive impairment, such as Alzheimer’s disease. Services may include help with activities of daily living, home health care, respite care, hospice care, adult day care, or care in a nursing or assisted living facility.
Why consider Long-Term Care Insurance?
This will depend on your age, health status, overall retirement goals, income and assets. If you already have health problems that are likely to mean you will need long-term care (ex/ Alzheimer’s or Parkinson’s), you probably won’t be able to buy a policy. You should consider buying long-term care insurance if: you have significant assets and income, you want to protect some of your assets and income, you can pay premiums, you want to stay independent of the support of others, or you want to have the flexibility of choosing care in the setting you prefer or will be most comfortable in. Medicare, Medicare supplement insurance, and health insurance usually will not pay for long-term care. For some, a policy is affordable and worth the cost. For others, the cost is too great, or the policy they can afford doesn’t offer enough benefits to make it worthwhile. To determine whether you should or should not consider buying long-term care insurance, you may refer to the worksheets found in A Shopper’s Guide to Long-Term Care Insurance. Your free guide can be ordered at: https://eapps.naic.org/forms/ipsd/Consumer_info.jsp.
How do Long-Term Care Insurance Policies Work?
Insurance companies sell policies that combine benefits and coverage in different ways. Generally, benefits are paid using of three different methods, the expense-incurred method, the indemnity method, or the disability method. When the expense-incurred method is used, the insurance company must decide if you are eligible for benefits and if your claim is eligible for services (this is the most common method). When the indemnity method is used, the benefit is a set dollar amount. Once the company decides you are eligible and you are receiving eligible services, the insurance company will pay that set amount directly to you up to the limit of the policy. When the disability method is used, you are only required to meet the benefit eligibility criteria. Once you do, you receive your full daily benefit, even if you are not receiving any long-term care services.
How Much do Policies Cost?
Premiums will vary based on a variety of factors, including your age and health, the level of coverage, benefits and options you select for your policy. It is best to educate yourself with the above-mentioned Shopper’s Guide and then contact your insurance agent. An annual premium for a 50 year old can vary from $409 to $1,087 and for a 65 year of from $1,002 to $$2,130.
What Shopping Tips Should You Keep in Mind?
Ask questions, check with several companies and compare outlines of coverage, and check out the companies’ rate increase histories by contacting the state insurance department. Investigate your insurance company or agent by contacting a rating agency such as:
A.M. Best Company www.ambest.com
Fitch IBCA, Duff & Phelps, Inc. www.fitchrating.com
Moody’s Investor Service, Inc. www.moodys.com
