Long Term Care
Chances are you have known someone who has needed to enter a Nursing Home or Assisted Living Facility. Either following a life-altering stroke or a diagnosis such as Alzheimer’s or Dementia, seniors often find themselves in need of some form of Long-Term Care. With the rising costs of healthcare and the stress a major illness can cause you and your family, a Long-Term Care Insurance policy can give you and your loved ones peace of mind for the future.
What is Long Term Care Insurance?
Long Term Care encompasses a wide array of services including skilled and personal care, but Long Term Care generally does not require a doctor or a nurse, and is not typically covered by regular health insurance, Medicare or disability insurance.
The need for Long Term Care is not always age-related. Although 70% of all individuals age 65 & over will need LTC at some point, it is important to note that roughly 40% of those receiving LTC today are between the ages of 18 and 64. It is never too early to plan for long-term care.
Here are examples of what LTC policies may cover:
- Institutional Care: Nursing home, assisted living services residential care facility, hospice care, adult foster home, respite care and more.
- Home Care: Home health care, adult daycare, personal care, homemaker services, hospice care, respite care and more.
Why purchase a Long Term Care policy?
- Protect Savings
Long Term Care costs can decimate retirement savings in a short amount of time. According to Genworth’s 2018 study of long term care costs, the average cost of a semi-private room in a nursing home is $90,155 a year.
Most are shocked to know that Medicare does not cover long term care. Without any protection against the high cost of long-term care or significant savings, you may end up relying on Medicaid for Long Term Care. It’s important to realize that you will have to have gone through the majority of your savings and assets to qualify for Medicaid and it does not give you very many options when it comes to facilities to receive your care. The quality of care varies greatly and unfortunately, Medicaid will put you in the least expensive option.
Types of Long Term Care Insurance
Traditional Long Term Care Insurance
A traditional long-term care policy acts much like an auto policy. You make monthly premiums, you only receive benefits when there is a claim, and there is no cash value in the policy. You will elect your benefits at the start of your policy based on the monthly benefit amount, benefit period, inflation protection, and waiting period length. You can customize your policy to suit your needs. Your premium is guaranteed renewable, meaning as long as you make your premium payment, you will have coverage. Because Traditional Long-Term care is “pay-as-you-go”, the premiums are often lower.
Hybrid Life and Long Term Care Policies
An option that is becoming more popular is a combination of life insurance with long term care coverage into one policy called a Hybrid policy. With a Hybrid policy, you can tap into the life insurance death benefit -the money that your beneficiaries would receive in the event of your death- should you need long term care while you are alive. The major upside is if you don’t need care during your lifetime, your beneficiaries will receive the full death benefit. Premiums for this type of policy are fixed so they will never go up over the life of your policy, but they are often paid upfront rather than on a monthly basis.