What to Look For When Buying LTC Insurance.
For anyone who is considering the purchase of long term care insurance, it is likely that you are at least somewhat familiar with the substantial cost of care itself. According to Genworth’s 2014 Cost of Care Survey, the average annual cost of a private room in a skilled nursing home in 2014 was more than $87,000 – and that’s just an average. In some areas, the price tag has already topped the 6-figure mark.
With that in mind, having long-term care insurance coverage makes a lot of sense for many people. Some people may want to know when should you buy long term care insurance? However, before you go out and purchase the very first policy that you find, there are some questions that you should ask yourself – and answer honestly – prior to moving forward.
1. Will you be able to comfortably afford the premium – now and in the future?
First, the issue of premium. While long-term care itself can be expensive, so can the coverage to protect you from it. Therefore, be sure that you can comfortably pay the premiums – both now and in the future if these costs should go up.
Throughout the years, many of the top carriers – even those that stated they wouldn’t raise prices – have increased their coverage costs. This has been due in large part to the exorbitant cost of claims that have now begun to come in.
One way to help in keeping your costs down is to purchase a policy that will cover just some of your costs of care, while you “share” in the rest of the expense using income from your assets and / or Social Security income.
Another potential option could be to purchase a single premium life / long-term care insurance plan. That way, your policy will be paid up after only one lump sum deposit. These particular plans have another added benefit in that if you never need long-term care, a named beneficiary will receive an income tax free death benefit upon the death of the insured.
2. Do you have assets to protect?
Next, do you have assets to protect? If so, then long-term care insurance can be a good move. All situations are different. For instance, in some cases, the potential cost of the insurance could essentially outweigh the need for asset protection. In other cases, though, a family member or other loved one may be able to help out with paying the long-term care insurance premium if your income is too low.
3. How long of a period should you insure for?
While there is no one right answer for everyone, most people will purchase what they can best afford and what will provide them with peace of mind. However, for those who are under age 65, it is recommended that a longer benefit period such as 6 years – or lifetime, if available – be considered.
4. Should you get inflation protection?
Inflation protection is an important component of the long-term care insurance benefit – especially for those who are between the ages of 50 and 65. For people in these age brackets, it is typically recommended that the compound inflation protection be considered.
This is because these insureds could potentially require benefits for many years – and having this inflation protection option can help to keep the benefit rising on pace with the increasing cost of future goods and services.
5 .What is the insurance company’s reputation for paying out its claims?
Regardless of what benefits you can get and / or how low the premium may be that you are charged, if the insurer that you are considering isn’t able to pay out its claims, then you will likely want to look elsewhere for your long-term care insurance coverage.
Working with an independent agency that has access to multiple insurance carriers can help with this process. We work with more than 40 insurers – and can work with you in finding the one that best fits with your particular needs. So, contact us and we’ll help you fit your potential long-term care needs in with the coverage that protects your financial future.