A closer look at long-term care insurance

For many Americans, buying insurance to cover your home, car, and health is standard practice. But long-term care insurance is a mystery to many, yet it offers significant financial protection against some of life’s uncertainties.

The goal of long-term care (LTC) insurance is to prevent the policy owner from paying the full bill for a long-term stay in a health care facility, such as a nursing home or nursing home. rehabilitation.

Because there’s no telling if you’ll need long-term care in the future, and the costs can be very high if you do need it, it’s worth learning about your long-term care insurance options and making an informed decision.

At some point later in life, you may need specialized care. For example, as you age, your doctor may discharge you to a nursing home after a hospital stay for surgery or illness. Fortunately, Medicare will cover qualified stays of up to 100 days. Sometimes, however, deterioration in mental or physical health caused by an accident, illness, or dementia will lead to a prolonged stay in a nursing home or continuing nursing care at home. When this happens, even families in good financial standing may need to balance long-term care expenses with their other priorities.

While Medicaid will cover long-term care costs after 100 days, this federal program requires people to exhaust personal savings first, among other qualifications. For this reason, even people who are financially comfortable can carefully consider long-term care insurance.

Here are some factors to consider when considering long-term care insurance:

Your age and health may affect your eligibility. Buying a policy when you’re relatively young and healthy can mean more years of payments, but it also helps you secure a benefit that may not be available when you’re older or if you experience a health problem. The cost of a policy tends to increase with age, especially after age 60, when health problems start to become more common. If you have a pre-existing condition or a family history of one, you may not be eligible to purchase certain policies. Check the fine print carefully to see if any conditions are excluded from coverage.

Long-term care insurance policies come in many forms, from basic to all the bells and whistles. Price is only one factor to consider. Compare policy components side by side to see which plan might make sense for you. Evaluate facilities and programs in your area so you can match your service expectations to what various policies may cover.

· Most plans are tied to the need for assistance with a predetermined number of activities of daily living (ADLs), such as dressing, showering, and eating. You’ll pay more if you want a policy that requires fewer concurrent ADLs to activate benefits.

Consider the costs of nursing homes in your area to determine whether you want to purchase coverage at the higher or lower end of the spectrum. Choose a daily benefit, or amount of covered expenses each day, that you can live with, as it is expected to make up the difference.

· Most plans have an elimination period, which is the amount of time that must pass before your insurance covers the bill. This “gap” in benefits ranges from 30 to 180 days. You are responsible for 100 percent of the costs before your benefits begin.

Inflation protection is a common plan rider that can help offset rising costs of care by increasing your eligible lifetime benefits under the plan. It’s worth considering whether you can afford the cost of a more generous lifetime limit.

Your financial advisor can help you calculate whether your projected future income and assets can support the cost of long-term care if the need arises. If you’re in any doubt, a long-term care insurance policy may make sense. Together you can review your options and choose a plan that will help you reach your long-term goals for financial security.