Because life is full of surprises, ensuring that you, your family, and your assets are adequately protected by insurance is a critical component of a successful financial and risk management plan. This includes not only having the right Property & Casualty, Life insurance and Disability coverage in place, but also Long-Term Care protection to preserve your financial assets in the event you or your spouse require ongoing medical care in your later years.
The fact is there are many health-related issues that can play a role in the need for long-term care — chronic illness, advanced age, accident, stroke, Alzheimer’s disease, and other cognitive impairments. According to the U.S. Department of Health & Human Services, about half of Americans turning 65 this year will require long-term care services during their lifetimes (47% for men and 58% for women), with most individuals needing assistance for an average of two years. About 12% will need between two and five years of long-term care, and nearly one in seven adults will require five or more years of care. Health insurance doesn’t cover long-term care, and Medicare only covers short nursing home stays or limited amounts of home health care when you require skilled nursing or rehabilitation.
The potential cost of long-term care services can be significant, varying by state and the type of care required. According to a 2017 Cost of Care Survey by insurer Genworth, the national average annual cost of a private room in a nursing home is $97,452. A home health aide will cost an average of $49,162 per year for 44 hours per week. You can see why it’s so important to create a wealth-protection strategy to help manage these long-term care expenses.
Inside Long-Term Care Insurance
Long-term care is needed if you can no longer perform basic everyday tasks on your own due to a chronic illness, injury, advancing age or cognitive impairment. This type of care is not intended as a cure but as personal care you might need for a period of time or the remainder of your life. Every day activities/tasks include bathing, dressing, eating, toileting, transferring and maintaining continence. Most Long-Term Care insurance policies start paying once you need help with two or more of these activities or suffer a cognitive impairment, after you have waited through the policy’s elimination period. Long-Term Care insurance includes coverage to allow for care in your home and assisted living facilities
You could choose to buy a Long-Term Care policy with a daily benefit that would cover the entire cost, or you could buy enough insurance to cover a portion of the cost and plan to self-insure any extra expenses on your own, which limits at least some of your risk. The best time to purchase a Long-Term Care policy is when you’re in good health.
What to Look for in a Long-Term Care Policy
There are many different policies on the market today ranging from traditional, standalone LTC to combination Life Insurance with LTC Benefits. We can help you determine what coverage will best suit your needs.
- Inflation protection: Since you’re purchasing coverage 10 to 25 years before you may actually receive benefits, you should consider including an inflation rider to keep up with the rising costs of care.
- Elimination or waiting period: This represents the length of time you will pay out-of-pocket for covered services before the policy responds. Typically, it’s 30, 60 or 90 days. The longer the elimination period in a policy, the lower the premium.
- Maximum daily benefit: This is the established amount a policy will pay up to each day during a claim period. The maximum daily benefit is specified in the original policy and may increase on an annual basis if you also purchase an inflation rider.
- Maximum benefit period: This is the amount of time (usually specified in years) you will be able to collect benefits for a qualified long-term care event. If, for example, you have a policy with a three-year maximum benefit period but were in care for four years, only the first three years of care would be covered.
- Lifetime maximum benefit: This is the maximum amount that the insurer will pay for all covered expenses throughout the life of a policy.
Long-Term Care insurance helps you safeguard your income by protecting against the high cost of care you may need. It also allows you to retain independence in decisions concerning care rather than relying on family members. Without this coverage, your finances could be significantly affected, and the impact on your family could be devastating. Owens Group specializes in providing clients with Long-Term Care insurance and is available to discuss your options. Please call Bob Owens or Denise Kligman at 800-26-COVER.