Be Sure You Ask Your Insurer THIS KEY QUESTION.

By Lee Bellinger / November 12, 2013

Long-Term Care Insurance:
Managing the Odds
on the Rest of Your Life

Couple reviewing paperwork It takes courage to look your final years straight in the eye and bet on whether you will need nursing care.

We want to help you weigh the substantial cost of nursing care versus the eventual potential benefit of purchasing advanced nursing services. The problem of course is that you won’t know until the very end of your life whether you made the best choice. But by weighing your options now, you have at least put an important planning matter on the table – which is far more than most people do.

Another benefit of going through a process of assessing your eventual medical needs is that you may well find a way to take a significant burden off your loved ones. But as with any good insurance plan, it is only as good as what you are buying.

Long-Term Care (LTC) insurance is continually evolving, adjusting to the times. And the choices are frequently confusing, expensive, and complicated.

We’ll recommend key points to focus on so you can be prepared to ask the right questions when talking to potential insurers.

Let’s go through the pros and cons behind making this very important decision…

Should You Be Considering
Long-Term Care Insurance?

What is Long-Term Care Insurance (LTCI)?

Long-Term Care is for those who no longer have the ability to live independently and need medical assistance every day.

  • Long-term health care is not covered by your medical group health plan, Medicare insurance or secondary health insurance. If you haven’t purchased it yourself, you don’t have it.

  • Long-term care insurers will only issue policies to those in relatively good health. That puts urgency on signing up. Most people start long-term care planning between ages 52 and 64.

  • Long-term care not just for the older set anymore. An injury caused earlier in life that will always need attention can be covered in a LT Care policy.

What Do You Think the Chances
are That You Won’t Need
Long-Term Care Insurance?

We know of someone who recently retired to the Villages, a well know retirement community in Florida. He is now getting to know his new doctors and acquainting them with his various conditions. He had a quadruple heart bypass in his early 50’s and is a diabetic who requires physical therapy for his circulation. He is in his mid-sixties and reminds friends that “growing old is not for sissies.” He knows he needs to plan continual care for his health conditions, so he took out a Long-Term Care Insurance plan.

In the move to Florida, somehow our friend’s insurance company misunderstood and thought he had closed the policy. To his surprise he received a check for the full amount of the premiums he had already put into the plan! Reimbursement was part of the policy. (Of course, he quickly sent the check back and reinstated his policy.) So be sure to ask the insurer: If I discontinue the plan, do I get my money back? If so, you know you have the choice to reinvest your money anytime into a protected asset like gold or silver, should you ever change your mind.

On the other hand, this friend’s mother-in-law is 96 years old and going strong. Medicare and a secondary health insurance plan have been enough for her. She lives comfortably in an assisted living facility. She lived frugally all her life and has the comfort of pensions and smart investments she made along the way.

Insurance Companies Are Stopping
Their Policies, Saying Long-Term
Care Is Too Big a Risk!

Prudential and Met Life have stopped selling policies – they just can’t handle the risk. The low returns and unpredictable costs were just too much for them. Other insurance companies have been forced to diversify their policies in order to cope with the rising costs.

You get to make the decisions on your LTC policy. It is up to you. Some 92% of all Long-Term Care cases only need about 3 years coverage. That means you now have a pretty good idea of how long you may need LTC, so don’t let the insurance company try to sell you 6 years without giving it plenty of thought. You may only want coverage for two years, or three. Deciding the length of your coverage time is up to you. Other issues to consider:

  • Make sure the LTC insurance company you are considering is financially sound
  • Check with a qualified accountant about the tax implications
  • Build in at least a 3% inflation protection into your policy — 5% would be better
  • Ask about the deductible and elimination period (the amount of time before you receive care before the benefits begin)

Long Term Care Insurance is still perceived to be associated with nursing homes only. Not true. Now, depending on your policy you can get coverage for:

  • Home Health
  • Adult Day Care
  • Assisted Living
  • Nursing Homes
  • Continual Care Retirement Communities
  • Respite Care

Beware of “Combo” Products More choices now offered in “combo” products make it seem like a Chinese menu of terms and benefits. Be sure you understand the small print in the detailed riders.

  • permanent life-insurance policy
  • death benefit
  • savings benefit
  • annuities with “accelerated” death benefits
  • annuities with lump sum or stream of income
  • “living benefit” riders
  • tax-free riders
  • benefits to family caregivers

Long-Term Care Insurance
Resources

  1. American Association for Long Term Care, Ins. www.aaltci.org
  2. USAA www.USAA.com


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