Long Term Care Insurance: Should You Buy It?

Long term care services can be expensive.  Long term care insurance helps you pay for these services.  It generally covers nursing home care, home care, assisted living, adult day care and other services.
 

Cost

The cost of long term care insurance depends on what type of coverage you buy and at what age you buy it.  The older you are when you buy it, the higher your monthly premium will be.  It can cost thousands of dollars a year. 

That is why there are several things to consider before deciding whether long term care insurance is right for you.
 

Things To Consider BEFORE You Buy

Low Income
If your income is low or will become low in the years ahead and you have few assets, spending thousands of dollars each year for long term care insurance might not make sense because you may qualify for Medicaid benefits in a short amount of time.

Support System
You might have family and friends who can provide some of your long term care should you need it.

Premiums
Decide whether you can afford to pay the premiums for long term care insurance both now and in the future without going way over your budget.  Remember that your premiums may go up and your income may go down.
 

Why People Buy Long Term Care Insurance

1.                  to save assets for heirs

2.                  to keep family members from having to provide care

3.                  to be able to live independently at home longer

4.                  to make it easier to get into a nursing home or assisted living residence of their choice.
 

Things To Think About

*           the older you are the higher your premiums will be

*           some companies may offer a discount if you buy when you
             are healthy

*           if you have a serious medical condition, some companies
            may turn you down

*           ask for an informal opinion before you fill out an application
 

TIPS to Help You Start Looking For Long Term Care Insurance

 Contact the Hawaii State Health Insurance Assistance Program which provides free long term care insurance counseling.
                On Maui, call:  270-7774

1.         Ask for a list of long term care insurance policies approved for 
            sale in Hawaii.  Find out if there were any complaints about any of
             the policies or companies that sold them.

2.         Do some research to make sure the policy you buy comes from a good company that is financially stable and has experience with long term care insurance.

3.         Check with organizations such as Standard and Poor’s, Moody’s and AM Best, which rate the financial strength of insurance companies.

4.         Compare information and costs from two or three major companies.

5.         Find out how often the companies increase their premiums.
 

TIPS To Help You Choose the Right Options

FLEXIBLE OPTIONS
Different policies offer different coverage options.  Since you do not know today what your future long term care needs will be, it’s a good idea to buy a policy with FLEXIBLE OPTIONS, if you can afford one.

ASK QUESTIONS
Make sure you understand all aspects of the policy.
Make sure to get the answers in writing.

ONE-TIME ONLY DEDUCTIBLE
Choose a policy that requires you to satisfy your deductible period ONLY ONCE DURING THE LIFE OF THE POLICY, rather than a policy that makes you pay a new deductible each time you need care.
 

Possible Options

1.                Nursing Home Care
A nursing home provides a full range of care (nursing; help with personal care and daily activities) and/or skilled care (24-hour medical, nursing and rehabilitation care.

2.                Assisted Living
A residence with apartment-style units where personal care and other services such as meals are available and adjustable to meet individual needs.

3.                Adult Day Services
A program outside the home for adults who need some help during the day.  The program provides health, social and other support services in a supervised setting.

4.                Home Care
Home care can include many services, such as personal care (bathing and grooming) and help with chores and housework.
 

Things You Should Know

*           Long term care insurance often will not cover ALL of your long term care costs.  You still may have to pay some costs out-of pocket.

*           You will have to pay the difference between the amount of your policy’s daily benefits with the AVERAGE DAILY COST in your area.

*           Some insurance companies require that you use services from a certified home care agency, while others allow you to hire whoever you want.

*           Make sure your policy will still cover you if you move to another state.
 

Tips to help you AFTER you decide to buy a long term care insurance policy

1.                  Read it carefully before you sign.

2.                  Never let anyone pressure or scare you into making a quick decision.

3.                  Never pay in cash, and always make your check payable to the company.

4.                  Most states require insurance companies to give you 30 DAYS to review your signed policy.  During this time you can return the policy for a full refund if you change your mind.
 

Definitions and Wording

Different companies use different wording and may even use different definitions.  Make sure you understand everything in the policy. 
Here are some common terms:

Daily Benefit
The amount the insurance company will pay each day you qualify for benefits.

Benefit Period
How long your coverage lasts.

Elimination Period
The number of days you must pay for your own care before your insurance company starts paying.  You should carefully figure out how many days you can afford to pay before your coverage kicks in.

Benefit Triggers
The conditions that determine if and when you can start being covered for services.

Tax Status
Whether your benefit payments are taxed, and whether your long term care insurance premiums may be tax deductible.

Pool of Money
A method used by insurance companies where they add up the total VALUE of your policy and lets you decide how much money per day you want to spend and how long you want the coverage to last.

Inflation Protection
This allows the daily benefit amount you choose to keep up with the rising cost of care.  The younger you are when you buy long term care insurance, the more important it is to buy a policy with inflation protection.)

Nonforfeiture Protection
After you have paid for your coverage for a certain length of time, some insurance policies guarantee you a limited benefit, even if you discontinue the coverage or stop paying for it.

Premium Waiver
This allows you to stop paying your premium after a you enter a nursing home or are certified for home care.

Guaranteed Renewal
This makes sure your policy will not expire unless you have used up your benefits or have not made your premium payments.
 

Deciding whether long term care insurance is right for    you can take some time and research.  Because of the   cost, it is time well-spent.    Doing your homework will help you make the best    decision about long term care insurance.

Excerpted from AARP – Caring For Those You Care About