Long Term Care Insurance
By the time you reach 65, chances are about 50-50 that you’ll require paid long-term care (Long Term Care) someday. If you pay out of pocket, you’ll spend $140,000 on average. Yet you probably haven’t planned for that financial risk. Only 7.2 million or so Americans have Long Term Care insurance, which covers many of the costs of a nursing home, assisted living or in-home care — expenses that aren’t covered by Medicare. “Long-term care is the unsolved problem for so many people,” says Christine Benz, director of personal finance at Morningstar, an investment research firm in Chicago. Here’s what you need to know about LTC insurance today.
It used to be that long-term care insurance entailed paying an annual or monthly premium in return for financial assistance if you ever needed help with day-to-day activities such as bathing, dressing and eating meals. Terms today usually include a daily benefit of $160 for nursing home coverage, a waiting period of about three months before insurance kicks in and a maximum of three years’ worth of coverage.
Premiums for Long Term Care policies average $2,700 a year, according to the industry research firm LifePlans. That puts the coverage out of reach for many Americans. (One bright spot for spouses: Discounts for couples are common — typically 30 percent off the price of policies bought separately.) If your assets are few, you may eventually be able to cover Long Term Care costs via Medicaid, available only if you’re impoverished; if you have lots of money saved, you likely can pay for future care out of pocket. But weigh factors other than cash: Do you have home equity you could tap? Nearby children who can be counted on to pitch in? Or do you have a family history of dementia that puts you at higher risk of needing care?
As traditional Long Term Care insurance become less popular, another policy is taking off: life insurance that you can draw from for long-term care. Unlike the older variety of Long Term Care insurance, these “hybrid” policies will return money to your heirs even if you don’t end up needing long-term care. Usually you don’t have to worry about the risk of a rate hike, because you lock in your premium upfront, the length depends on the type of life insurance you chose (level term, universal life or whole life.
Are you prepared?
Find out if you’re eligible for benefits by calling Joseph Cioffi, the independent insurance agent in Springfield, Oregon. Contact me now.