Do I Need Long Term Care Insurance?
The 7 things you MUST know
before buying insurance
Why is it so hard to have ‘The Conversation’ about long term care?
No one likes to think about the final years of their life. It’s frightening. But not having the right plan in place could be devastating.
These are some questions you should ask yourself:
- Who will take care of me if I am unable to care for myself?
- Who will pay for me to receive professional help?
- How much will it cost?
- Will I be a burden to my children and loved ones?
Long term care isn't just about you; it’s about those you love.
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Six Ways to Pay for Long Term Care Insurance
This means pay for it yourself. If you have enough savings or a robust retirement income, this is a viable option. However, the cost of long term care ranges from $40,000+ for a part-time, custodial, in home aide to $100,000+ for a skilled nursing facility. This doesn’t cover possible ancillary medical costs or other living costs you and your spouse might incur as well. Current overall healthcare inflation is between 5%-15% depending on the product or service. Either way, it well out paces the current rate of 1.7%. Even with millions in savings, your funds will quickly diminish.
You might believe if your investments are insubstantial enough to cover long term care, the government will fund it. The short answer is maybe. But there are limitations to what services and how long the government will pay for care. And the paperwork to apply is perhaps even more daunting. Full coverage of long term care is only provided to those who are completely destitute. And facility choices are limited with government reimbursement options because most prefer not to accept them as payment. Even without other challenges to contend with, these factors alone could result in inadequate care.
First and foremost, you need to have served in the military and have an honorable discharge. So only eight percent of the current population is eligible for this. It is important to note, the VA does not pay for room and board in residential settings such as Assisted Living or Adult Family Homes. The VA provides nursing home care if you meet certain eligibility criteria involving your service-connected status, level of disability, and income. The VA will not provide care for your spouse.
Traditional Long-Term Care Insurance
This is a lot like the insurance you might own, such as auto or healthcare insurance. You pay a premium. In return, the insurance company will pay a professional to assist you with your problem. Long-term care insurance will pay for services such as home-based treatments and assisted living. This usually provides the most value in terms of premiums paid to benefits paid out. Premiums are tax deductible. And many states will offer additional financial protection if you own one of these policies. However, the underwriting is stricter and requires you to be in good health without preexisting conditions to qualify.
Long-Term Care Annuities
Annuities have been scrutinized by the media. And in some cases, rightfully so. However, they still can provide you with a way to pay for long-term care. Annuities can provide monthly payments to those who have been denied long-term care insurance for health reasons. There are also some circumstances where this may be a simpler option than traditional long-term care insurance since it may not require a medical examination.
Long-Term Care/Life Insurance
This is a relatively new product in the marketplace which has become increasingly popular in the past 10 years. As a result, these long-term care/life insurance policies (also called hybrid or linked benefit policies) are changing often. Insurance companies developed these for those who were concerned about purchasing long-term care insurance yet never utilizing the benefit. Hybrid products like this ensure your premium is returned. The premiums are guaranteed never to increase. Of course, these additional features result in more expensive premiums.