5 Considerations in Deciding Whether to Buy Long-Term Care Insurance

Daniel Penzing
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The Factors in Buying Long-Term Care Insurance

Your Net Worth

If you are extremely wealthy, you may not have much to lose if you can't pay your personal medical expenses. For most people, though, they have already heaped up a great deal of debt on homes and cars. The sudden onset of illness could burn through the money they have budgeted for their children's education. This would prevent them from paying for college or help them later on. Long-term care insurance could help your family as well. If the insurance does not pay for your medical care or helps to defray expenses, it may help to keep your health crisis from becoming a financial crisis as well. The amount of assets that you have and your net worth will be one of the first factors that you will take a look at.

Spouse's Financial Security

To gauge the financial consequences of end-of-life medical expenses, it's most helpful to look at your family's income and expenses as a percentage of your overall annual income.

While you may be able to buy some coverage in the form of a rider on your life insurance to cover the expenses you might face, you generally can't rely on just your own life insurance policy to provide for your family if the worst should happen to you.

Medicare is gradually being phased in to cover some expenses, but there are still many uncovered expenses, such as nursing homes, skilled-nursing care, rehabilitation services, and prescription drugs.

Can you face the prospect of leaving your spouse without health care coverage to pay for the costs of long-term care? Or, in the future, would you consider selling their assets, or some of your own, to pay for your long-term care?

How would your spouse manage financially without your income to rely on? If your spouse works, his or her earnings no doubt supplement yours, and that represents a built-in safety net that comes with the support of a partner who earns a salary.

If you have a pre-existing medical condition, would your spouse be better off with the protections of long-term care insurance, or without?

Wanting to Leave an Inheritance

Long-Term Care Insurance (LTCI) is not purchased today by a lot of people. Why? People for the most part do not plan on developing a chronic condition that would require them to receive LTCI in the future.

However, if you’re caring for an aging parent or a grandparent, it’s an investment that you should consider before it’s too late. In fact, with life expectancy increasing each day, it’s an investment that you should consider for yourself before it’s too late.

It took me a little while to accept the fact that one day I’m going to need long-term care. (I’m not going to lie.)

But my future seems a lot more certain when I think of my mother’s future. My daughter is only 10 years old, and I don’t want her and her parents to think about my care when they get older.

Getting the Care You Need

You should not have to make a decision for yourself or any other member of your family on the assumption that you will be able to take care of them yourself at home. Most of us can only do so much, and costs are increasing at a staggering pace. That is where long-term care insurance can complement Medicare and Medicaid, giving you a choice as to where and how to get the care you need.

The cost of care can be catastrophic. Sound decisions about buying long-term care insurance are important. As with most issues in life, it is often helpful to get advice from those who have been there before.

What is long-term care insurance?

Long-term care insurance is insurance that helps pay for both custodial and non-custodial assistance. It helps pay for care at home or in a facility like a nursing home. There are no work requirements, and it is not based on your ability to pay.

In some cases, long-term care insurance can also pay your loved one for assistance and care given to you. It can also be combined with other policies like Medicaid, or it can be purchased independent of Medicaid eligibility.

The Cost of Long-Term Care in Your Area

For most, long-term care isn’t needed until old age. Fortunately, long-term care insurance can cover costs of care not covered by Medicare or Medicaid. However, the exact amount and nature of the coverage can vary.

Other Considerations for LTC Insurance

Just as we advised above, you should consider the coverage, the rate, and the provider first. You should focus on the basics first and then move on to more detailed issues.

Any plan that you get should be for a single or joint policy. The more people included in the policy, the higher the rate will be. There should be an option for a conversion policy, which will convert the life insurance policy into a long term care policy. It would make sense to convert the policy into a long term care plan that is flexible and meets all of your needs. You can decide to convert it into a long term care plan in the future when you need it.

A long term care plan helps with medical expenses that exceed a certain amount. So you need to be sure that the coverage that you opt for is much more than the maximum expenses you’ll ever incur.

Check with the company from where you plan to purchase the policy. They should do a health checkup and give you a copy of the results. A medically underwritten or issue-based plan would have a higher rate but may give you better care and coverage.

Some basic issues may include that you must have a specific illness or diagnosis. Basically, you should look for a health problem that you could have in the future but have not had yet.

Summary

Taking the time to make an informed decision about long-term care can help you better plan for the future.

Long-term care (LTC) insurance provides financial assistance paying for long-term care, such as in a nursing facility or in your own home.

There are a variety of considerations to keep in mind when deciding whether to buy a LTC insurance policy, including:

  • Long-term care is expensive.
  • You may not need it.
  • You may have coverage already.
  • LTC doesn’t need to break the bank.
  • Long-term care policies are complex.