Long-term Care Insurance

Long-term Care Insurance

Understanding the risks of needing long-term care and the possibility of incurring substantial expenses is a huge part of financial planning. Proper planning can allow a person to avoid not being prepared for the need for care as you age. Over the last century medical science has been able to greatly increase life expectancy. Individuals are living on average 20-30 years longer and sometimes need assistance with day to day needs. Long-term care is now offered in a variety of settings, such as; nursing homes, assisted living residences, life care communities, adult day-care or even in person's home.

A person's health status affects the likelihood of incurring a long stay with catastrophic expenses. It is imperative that you weigh all the risks involved with purchasing or not purchasing insurance. Likewise, understanding what you may need in terms of coverage is prudent. A few tips when shopping for a Long-Term Care Insurance policy are:

  • Buy a policy with a daily benefit amount that pays between 80 – 100% of current long term care costs
  • Understand how your assets and income affect the products you plan to use
  • Buy a policy that compliments Medicaid benefit periods
  • Look for policies that offer dollar value measured benefits or count home care
  • Buy a policy with a shorter benefit period with a higher daily benefit amount
  • Be mindful of "overbuying" benefits

Consumers need to understand the consequences of policy features and to carefully read the policy to be sure that it provides the benefits wanted. A general rule of thumb is to buy enough insurance to cover 50-100% of costs. On average, skilled care will cost a consumer between $6,000 -$7,000 a month. Buying enough insurance, while not overbuying, takes an analytical approach that considers a person's finances, expected needs, cost of care and preference. Although we do not sell long-term care insurance, we are happy to discuss the matter with you in terms of your financial plan and recommend some providers for you to discuss your needs in greater detail.

Risk v. Reward
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Sunday, 01 August 2021

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