Long-term care (LTC) insurance is designed to cover many of the costs of a nursing home, assisted living or in-home care, which are expenses that aren’t covered by Medicare. Consider this statistic. By the time you reach age 65, chances are about 50/50 that you’ll require paid long-term care (LTC) someday. If you pay out of pocket, you’ll spend $140,000 on average. Yet, if you’re like most, you probably haven’t planned for that financial risk, nor has your family.
LTC insurance comes into the picture to help provide a safety net so that when you or a loved one needs LTC that is not covered by Medicare, you are not stuck paying completely out of pocket. Here’s a breakdown of the core benefits that LTC insurance aims to provide.
- You will have financial security amidst unpredictable situations.
LTC insurance will give you the peace of mind and financial security net that, should you or a loved one need LTC care, you can afford the best care for the situation without the added stress of mounting bills or having to choose a less desirable option. While the cost of LTC insurance can seem steep in comparison to other types of insurances, you should consider your full financial situation in which it just might make sense to pay into having this security available to you.
- You have options.
There are traditional LTC insurance policies, and also hybrid LTC insurance policies – each with unique advantages and disadvantages. Hybrid policies will return money to your heirs even if you don’t end up needing long-term care. You don’t run traditional policies’ risk of a rate hike, because you lock in your premium upfront. However, hybrid policies are usually two to three times more expensive than traditional insurance for the same long-term care benefits. It’s smart to examine all your options and select what best fits your need.
- Buying into LTC insurance early can help you save.
If you are considering the possibility of LTC insurance, start looking in your 50s or early 60s, before premiums rise sharply or worsening health rules out robust coverage. Simply put, every year that you delay, the cost will increase. Initial premiums at age 65, for example, are 8 to 10 percent higher than those for new customers who are 64. To help guide you through the “shopping” process, seek out an independent agent who sells policies from multiple companies rather than a single insurer.
- It may not be for everyone, and that’s okay.
LTC insurance may not be the right fit for you or your loved one. Many variables can impact this, and ultimately only you know what is right for you and your family. In some instances, the cost of this type of insurance may be prohibitive. Or maybe you have enough money saved in case of emergency, that LTC costs are not as dire of a concern. The most important takeaway is that even if you don’t choose to have LTC insurance, you still need to have some sort of plan in place to offer you protection should you find yourself needing LTC at any point in your life.
If you have any questions about options for LTC insurance for you or a loved one, it’s best to speak to a trusted insurance agent who is licensed to sell this type of insurance. They can help you understand the limitations of what this covers as well as an estimated cost for the insurance you need.