Do you need long term care insurance?
I didn’t even know what it was until my father, and insurance salesman, bought policies for himself and my mother. He was a little older at the time, but the premiums were still low in comparison to the benefits. My mother subsequently developed Alzheimer’s dementia that over time required more and more care, and he was determined to keep her at home. She was able to enjoy art, music, and company that she might not have gotten at a nursing facility.
To my great relief and surprise, the long term care insurance benefits paid for a home care assistant for the 9 years that she lived with that dreaded disease. That was a financial miracle for my father, who had retirement funds that were planned for a healthy retirement. He would have been wiped out!
Long term care insurance is a must in this day and age as we live longer, but not necessarily, healthier lives. Despite having Social Security, other retirements plans, and Medicare, the costs and risks associated with a debilitating long term health issue are immeasurable. Between private nursing services, assisted living, and other medical needs, you could burn through your retirement savings quickly.
Here are some questions you need to consider before purchasing long term care insurance.
When Do You Plan To Buy Long Term Care Insurance
Timing is very important when it comes to purchasing any insurance product. This is doubly true for long term care insurance. Like other insurance, coverage must be purchased before the insured even requires the services covered under the policy. The premiums are cheaper when you buy the insurance early in life. I bought mine at age 48 after seeing the benefits my mother obtained. However, this means making payments while receiving no immediate benefit. Experts suggest that 50 to 65 years is fine for purchasing long term care insurance coverage since there is a greater chance of utilizing it.
What Are Your Reasons for Buying?
When purchasing long term care insurance, you first need to consider if you require the insurance. Some people know that they have a support system in the form of family and friends who would be there to provide the long-term care. On the other hand, some people know that long term care can be a strain on their family, especially when professional care is needed.
The psychological and physical effects of caring for a sick loved one alone for an extended period of time can have its own devastating consequences.
Can You Afford It?
This is a painful question when it comes to caring for you, your spouse, or your parents. While purchasing any insurance requires delayed gratification, visiting a nursing home or talking to friends with loved ones with dementia will sober you up quickly.
I pay about $2,400 a year for $475,000 in lifetime coverage, so lower benefits obviously translate to lower costs. You can invest in other instruments or save up enough funds to be used later in financing your assisted living or nursing care situation. Long term care insurance may be too expensive if you have low income or few financial assets, but seeing what options are available is important.
If you cannot afford long term care insurance premiums, you might qualify for Medicaid, which does have some benefits which give limited long term care insurance options. Keep in mind that it significantly reduces options for care facilities.
In my experience, premiums stay fairly steady once you have a policy, and you may be offered additional benefits each year for only a small increase in those premiums. With the rising costs of care, I recommend choosing that option if it fits into your budget.
That being said, if you can’t pay your premiums anymore, the best case scenario is that you live in a state that mandates non-forfeiture benefits be part of the policy. This means that you will still receive reduced benefits based on the amount you have paid so far. For those states where this isn’t available, the entire benefits are lost.
Is the Policy Suitable for Your Condition?
Keep in mind that you might not even qualify for long term care insurance. Insurers often reject applications on basis of pre-existing conditions. That’s why the younger you buy a policy, the easier it is to get qualified and enjoy lower premiums. If you’re only now thinking about purchasing long term care insurance, make sure that you don’t need care for your condition immediately.
Long term care insurance can be a source of relief if, and only if, it stays within affordability over a long period of time. Whatever option you go for, remember to have some kind of a plan in place that can be your safety net during advanced age.
