Long-Term Care Insurance 101

Long-term care is a type of care that you may need if you have a chronic disease or disability that prevents you from being able to care for yourself. Though it’s hard to imagine, the fact is you may need some emotional and physical help in the later stages of life. Now, The thing that needs your attention is “Who deserves to be paid by you to serve you in your old age?” Don’t worry! We have a reliable solution to your problem. The long-term care insurance!

With the long-term care insurance plan, you may enjoy the golden years of your life to its fullest. The strategy designed by long-term care insurance makes sure that the remainder of your life is happy and healthy. Keeping this in mind, we are going to discuss long-term care insurance, how it works, when you should buy the long–term insurance, and every other factor related to long-term care insurance.

What is Long-Term Care Insurance?

Long-term care insurance is the ultimate security of your well-being in your old age. Long-term care insurance is health insurance, including assistance with all your daily-routine activities like bathing, combing, dressing, and getting in and out of bed.

Many people suffer from chronic medical conditions, disabilities, or disorders like Alzheimer’s disease, Dementia. It gets hard for them to survive in their advancing years. Long-term care insurance, a long-range financial plan, will assist you during your days of illness.

Criteria to Buy Long-Term Care Insurance

One might wish to buy a long-term care insurance plan, but what are the criteria for buying a long-term care insurance plan? We doubt many of you are unaware of the criteria. Therefore, here we are going to discuss the criteria for buying long-term care insurance. 

There are certain conditions to be able to buy long-term care insurance. You are not able to apply for long-term care insurance if you already have some debilitating condition. If you are above 75 and now you are getting thoughts of having someone for your assistance and want to apply for this insurance, then it is not an option for you. The ideal age to buy this insurance is mid-50s-mid to 60s years.

You become eligible for the benefits of the policy when you cannot do 2 out of 6 daily activities or suffer from any cognitive disorder.

The activities of daily living:

  • Bathing
  • Eating
  • Transferring (typically getting in or out of a bed or chair)
  • Dressing
  • Caring for incontinence
  • Toileting 

How Does Long-Term Care Insurance Work?

The main focus of long-term care insurance buyers centers on the fact of how long-term care insurance works. To help you properly understand how it works, here we are going to explain the working of long-term care insurance in the simplest possible way.

The procedure includes filling out an insurance application. It includes health questions. Your medical records are checked, and you may be interviewed by phone or face-to-face. You then select the number of facilities or the amount of coverage as per your need. Once you complete the formalities and choose your coverage, you start paying your premiums.

When you think you require care and want to claim your insurance, the insurance company will review your medical reports from your doctor. The company may send a nurse to you for a thorough evaluation. Insurers then approve your plan of care and then become eligible for your claim.

When a company makes sure that you are now eligible for the benefits of the insurance, it starts paying out. Most insurance policies pay up to a limit for your care until you reach the lifetime maximum.

In the case of shopping for the policy by a couple, companies offer both spouses a bonus option, also known as a shared-care option. The purpose of this bonus option is to provide you with further ease by letting both of you share the total amount of coverage. This directly means if the limit of your policy is reached, you can use the facilities available for your spouse.

Do I Need Long-Term Care Insurance?

With the progressing age, this question may come across everybody’s mind. Long-term care insurance is basically a type of insurance that can help cover the costs of care for people who are not capable of caring for themselves. Whether you should buy Long-term care insurance or not depends mainly upon two things:

1: Your health insurance coverage.

2: Your ability to self-pay for these costs.

If your age is 65 and you are still working with a provided long-term care insurance by your employer, then you don’t need to buy separate long-term insurance. But this is an exception and doesn’t occur in general.

If you are well off enough to endure all the costs of the health care facilities by your pocket, then obviously, you are not going to depend upon insurance policies to provide you with these facilities.

So, it depends upon the conditions you have in your life.

When Should I Buy Long-Term Care Insurance?

Though there is no definitive answer to this question, there are certain factors to consider, including your age, health, assets, and whether you have family or other support systems in place. 

Decide by age 65

Most insurance companies suggest that you should buy the policy by the age of 65. This is more about the higher chances of your taking the benefits of affordable Medicare coverage. This also provides the edge of having medical reports uncover issues that can make it more difficult to qualify for long-term care insurance.

Why Should I Buy Long-Term Care Insurance?

According to Administration for Community Living, part of the U.S. Department of Health and Human Services, nearly 70% of 65-year-old people need long-term care support and facilities. They must have a reliable source of services to serve them in their old age.

There lie two major reasons you must buy Long-term care insurance:-

  • Wide Variety of Care Choices

Long-term care insurance provides you with a wide variety of choices for your long-term care needs. On the other hand, Medicare provides you only with nursing homes for a specific number of days with the help of the government and only in a few states. Hence, long-term care insurance is preferable in every case.

  • To Protect Your Lifetime Savings

Long-term care insurance provides you with the best care facilities with an item of minimum expenditure. According to the American association of long term care insurance in 2020, If a couple buys this insurance, it will only cost them a yearly premium of $3,050 on average. On the other hand, the median cost of a private nursing home ranges from $19,240 for adult daycare services to $105,850. It will cost more than $260,000 in only two and a half years.

Why is Long-Term Care Insurance Worth It?

There are many reasons for considering long-term care insurance. Perhaps you are nearing retirement and want to protect your assets. Or maybe you have a family history of chronic illness and want to be prepared. Whatever your reason is, long-term care is a smart choice for anyone who wants to protect their health and well-being in old age.

In the late years of your life, you must have come to know that everything doesn’t go according to your plans and tactics. If you are living a good life now, you may face changes in your condition and circumstances later in your life. At this point in an unwanted period of your life, you may feel the need for long-term care insurance.

The companies like Nationwide or Mutual Of Omaha offer long-term care insurance. These companies cover the high cost of nursing home care, in-home care, assisted living facilities, and adult day care. All these facilities otherwise would cost you much.

Despite all these benefits, long-term care insurance is quite expensive. For a 65-year-old man having some health issues, annual premiums can be almost $2,100. For a woman of 65 years, premiums may top $3,100. Though as compared to other private facilities, this is quite less but still high for a normal citizen.

5 Must-Know Facts About Long-Term Care Insurance

As we age, the likelihood of needing long-term care increases. According to research done by the U.S. Department of Health and Human Services, about 70% of people who are above 65 are in need of long-term care services during their lifetime. Moreover, there are 5 things you must know about long-term care insurance:-

  • Traditional Policies Have Fewer Fans

For many years long-term insurance has been assisting people by providing them with care like bathing, dressing, and eating meals in return for money. When we go through the condition of the insurers, we come to know that because of the rise in premiums, they have faced much trouble. Because of this, in the 1990s, more than 100 insurers used to sell this long-term care policy; now, only less than 15 are selling. The reason is clear that they are facing loss in this business.

  • Remember Insurance Plan is a Must!

According to the industry research firm conducted by LifePlans, Premiums for LTC policies are around $2,700 a year on average. This is out of the reach of many Americans. Discounts for couples are provided, which may be 30% of the original policy. If your assets are low, you may ultimately be able to afford LTC expenses with Medicaid. But if you are wealthy enough, you can quickly pay for future care from your pocket.

  • There’s New Insurance In Town

Long-term care insurance doesn’t include returning the money to the heirs if you don’t end up using the benefits of the policy. There is an introduction of a new policy in town. The “hybrid” policy. According to this policy, the money you pay for long-term care will be refunded to your heirs in case you do not end up needing long-term care insurance.

  • But Old-School Policies Are Cheaper

“Hybrid policies are usually two to three times more expensive than traditional insurance for the same long-term care benefits” (Scott Olson)

If your preference is cost-effective coverage, even if that means nothing back because you never need help in your future, then at this stage, traditional LTC insurance has the edge.

  • Speed And Smart Shopping Pay Off

“Every year you delay, it will be more expensive,”

If you want to buy long-term insurance, do it in your 50s or 60s, it will save you from robust increasing premiums.

What Are My Possible Options for Long-Term Care Insurance?

There are 3 major options when it comes to long-term care insurance.

  •  Traditional Long-Term Care Insurance

Traditional long-term care policies can also cover long-term care expenses at your home within your comfort zone. It is also termed “standalone” long-term care insurance.

  • Hybrid Long-Term Care Insurance

A hybrid policy is more effective as it provides coverage for long-term care in your home for your loved ones or is an option, along with a death benefit. If you end up with zero use of your policy, your heirs will get the payment of the insurance. It is also known as a linked benefit.

  • Life Insurance With a Long-Term Care Rider

Some life insurance policies offer the facility of a “rider” that allows you to add on additional coverage of benefits for long-term care. Rider enables you to use some of the benefits in your life that are destined to be used after your death only.

Which type of Care Does Long-Term Care Insurance Cover?

Long-term care insurance is available in the form of various types and policies. Policies are available, and each one covers a different range of services. Some policies will cover in-home care, while others will only cover care received in a nursing home or assisted living facility. Moreover, long-term care insurance covers the following areas:

  1. Home Health Care
  2. Adult Day Care
  3. Personal Care
  4. Homemaker Services
  5. Hospice Services
  6. Respite Care
  7. Cost of professional nursing care
  8. Occupational therapy
  9. Rehabilitation
  10. Help with routine tasks, such as bathing or brushing teeth
  11. Short-term hospice care
  12. Pain management
  13. Emotional and physical support

If you don’t have long-term care insurance, you’re on the hook for affording these facilities. Thus, long-term care insurance provides you with the best facilities to make your golden phase of life much easy and more comfortable.

How Much Long-Term Care Insurance Do You Need?

This is definitely a tricky question to answer because it depends on several factors, including your age, health, and financial situation. The following are a few things that may help you in deciding how much long-term insurance care you need.

First of all, you must evaluate the number of services you think you will need in the future. Many individuals need a nursing home for proper care; on the other hand, some may be in no need of any nursing home and can easily avoid nursing home expenses. These people can enjoy In-home care or day health services along with living services.

In case you have a health condition that you know will have to be taken care of in a skilled nursing facility or you prefer to prepare for unexpected medical disorders or events, you may consider buying a certain amount of long-term care insurance for your future care and safety.

How Much Does Long-Term Care Insurance Policy Cost?

The cost of long-term care insurance depends on many factors, including the type of care you are looking for, where you live, and how long you need care. The monthly median cost of long-term care insurance includes the following:-

In-Home Care

Homemaker Services$4,957
Home Health Aide$5,148

Community and Assisted Living

Adult Day Health Care$1,690
Assisted Living Facility$4,500

Nursing Home Facility

Semi-Private Room$7,908
Private Room$9,034

Where Can You Buy Long-Term Care Insurance?

There are a lot of options available where you can buy long-term care insurance. You can buy it through an insurance company, a financial planner, or the government. If you are wondering about buying long-term care insurance in 2022. Below are the 5 highly recommended companies that can offer you the best insurance services:

  1. Nationwide: Best for Customer Satisfaction
  2. Mutual of Omaha: Best for Discounts
  3. Golden Care Insurance: Best Marketplace
  4. New York Life: Best for Financial Stability
  5. Northwestern Mutual: Runner-up for Financial Stability.
  6. We recommend working with a licensed professional here that will help you analyze your need and help you find the best coverage possible.

What Are My Long-Term Care Insurance Needs?

As we age, we often face new challenges that require us to re-evaluate our insurance needs. One of these challenges is the need for long-term care insurance. Long-term care insurance helps to cover the costs of care for those who cannot perform basic activities of routine life, such as bathing, dressing, eating, and using the restroom, on their own. A long-term care insurance calculator needs the following:

Age, Savings, and Assumptions:

Your age plays a vital role in defining your long-term care insurance needs:

  1. Your current age (1 to 120)
  2. Age estimated to begin long-term care (1 to 120)
  3. The annual cost of long-term care in today’s dollars ($)
  4. Annual long-term care inflation (0% to 10%)
  5. The number of years estimated to need long-term care (1 to 40)
  6. Value of funds already set aside by you for long-term care ($)

Recommendations Saving Assumptions:

  1. Before-tax return (-12% to 12%)
  2. Marginal tax bracket (0% to 75%)
  3. Annual increases (0% to 10%)

This information may help you know about your financial needs.

Final Thoughts

Having Long term insurance undoubtedly provides you with tons of benefits. One of the most important is that it can give you the opportunity to stay in your own home as you age, rather than having to move into a nursing home or assisted living facility. It can be a great way to maintain your independence and keep your loved ones close by. Plus, it can be more cost-effective than other options.

Long-term care insurance helps you in your later years of life. Thus, thorough guideline about long-term insurance is given in this blog post that will help you buy it. All the details about this policy are mentioned, including why you should buy it when you should buy it, and how can you know you require this insurance.

If you are looking for the best long-term care insurance plans, contact us. We are happy to help you find the best coverage possible within your budget. 

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