Long-Term Care Insurance
For people who are concerned about potential long-term care (LTC) costs, LTC insurance may be an option. Several insurance companies sell these policies that pay out to cover some or all LTC costs. There are many different types of policies and coverages available. For example, some coverages may start soon after LTC is needed while some coverages will not begin to pay for a longer period, sometimes as long as one year. Also, some policies are combined with a death benefit so that the policy holder can be sure that at least some benefit will come from the policy. The following are some, but not all, of the terms and conditions to consider when exploring a LTC insurance policy:
Duration of Benefits. Most policies cover at least one year and may cover up to five. Policies that cover more than five years are no longer available. Obviously, a longer-term policy is preferable but that must be balanced against the higher premiums.
Benefit Triggers. The LTC policy will only start to pay out when certain triggers, or conditions, are met. Before paying out, most policies require the policy holder to need assistance with at least two of the following activities: bathing, dressing, toileting, eating, transferring and continence. Be sure to understand what conditions are required for payout to be triggered.
Waiting Period. Policies will include a waiting period. The waiting period may be a few days or as long as one year. The longer the waiting period the lower the policy premiums will be.
Daily Benefit Amount. A LTC policy will include a daily benefit amount. Some policies may pay 100% of the daily LTC costs. Other policies may only cover 50% of the LTC costs. The policy can be used to cover only that portion of LTC costs that income does not.
Inflation Protection. Like any cost, LTC costs will increase over time. Some policies will have inflation adjustment built in and automatically increase over time. Other policies will offer the holder the ability to increase the coverage to keep up with inflation but this will also increase the premium. It is important to know what type of inflation adjustment provision is in a policy.
Depending on the type of policy and robustness of coverage, LTC policies can be expensive. Not everyone will be able to fit LTC policy premiums into their budget. Also, not everyone is insurable. People with significant pre-existing health care issues may not be able to obtain a LTC policy.
If a policy can be obtained to cover all LTC costs or at least cover the deficiency that income does not cover, all assets will be protected. Therefore, the owner can keep all their assets and continue to enjoy and use them for the remainder of their lives. LTC insurance policies, in many ways, provide the most flexible LTC plan.
It is worthwhile to at least explore incorporating a LTC insurance policy into a LTC management plan. Many insurance agents and financial advisors can provide free estimates for policies without too much difficulty. They can also help with a risk assessment to determine what policy may be needed for a given circumstance. Before assuming that assets must be gifted or transferred to protect them, the possibility of LTC insurance should be explored.
Tags: long-term care