Buying Long-Term Care Insurance

No one likes to think about a day when they might not be able to take care of themselves, or a time when they might have to depend on their loved ones to help give them care. It’s especially easy to push these thoughts aside when you’re healthy and active.

However, now might actually be the perfect time to start shopping for long-term health insurance, as the healthier you are, the better your chances of getting good coverage at a good rate. Investing now in your future care through a long-term health insurance policy can help ensure that your twilight years are comfortable and provided for, without putting additional burden on your loved ones or forcing you to make compromises in your care.

So now that you’re thinking about long-term health care, where do you even start? Experts agree on a few basic points to get you started.

1. DO the math.

It’s important to create a good picture of how much money you’ll need on a daily basis for your care. Things to consider include where you live (health care costs vary greatly across the country, just like current costs of living) and what type of health care you’ll prefer (for example, in-home care typically costs three times more than nursing facilities). Take a look at the national health care surveys by Genworth Financial and MetLife Financial for a reference point, and keep in mind that the average policy pays $149 a day. If you find you’ll need more, find a policy that offers the closest to your estimated daily costs. Also, keep in mind you’ll still need to pay for Medicare Part B, Medigap plan, prescription drugs, and doctor visits, and that inflation will up the costs in future years (healthcare inflation is currently about 2.5 percent, but the long-term average is closer to 6 percent). It’s better to be prepared than to have the costs surprise you.

2. DO the research.

Be sure to research any company that you are considering using, and look at their track records. You can call the National Association of Insurance Commissioners at (866)-470-6246 and get the phone number for your state health-insurance department to learn if there are any reported issues with a provider. It’s also useful to review the company’s 10-year rate of increase to get an idea of how often they increase their premiums. In addition, insurance companies are required to provide customers with a 30-day trial period to review their policy; take advantage of this time to carefully review your policy – especially the exclusion clause – to ensure it has all the benefits you want. If you return it within 30 days, you will get a full refund on any premiums paid. Be sure to pay with checks or credit cards only (not cash) and use certified mail when necessary to document all transactions.

3. DO act now.

The ideal time to start shopping for long-term insurance is at least by your late 40s or early 50s. Insurance companies first look at your physical health, then your age. People with chronic illnesses can find it difficult, or even impossible, to get insured, so don’t wait until your health is declining. In addition, the younger you are, typically the more affordable the premiums are. On average, a person in his or her 40s or early 50s will pay about $3,000 to $6,000 a year for a very good policy; a person 10 years older may pay thousands of dollars more for the same policy.

4. DO buy enough.

Experts recommend starting with 5 years of coverage (only 20% of people will stay in a nursing home longer than 5 years). However, remember that in-home care is substantially more expensive than facilities, especially once you surpass more than 4 hours of care a day; in other words, you may actually get more for your money at a nice care facility. In addition, if you have extra money you can put towards your policy now, consider upgrading with a shorter waiting period (most policies require a waiting period for benefits to kick in once need is established), compound-inflation protection riders, and nonforfeiture-of-benefit rider (in the case of a future time when you cannot afford your premium because of increased rates, etc.). Again, investing now can save you and your loved ones huge amounts of stress and financial worries down the road. A nice benefit is some payments for your policy may be tax deductible.

5. DO find an expert or an advocate you can trust.

If you have a financial advisor, he or she may have some training in the area of long-term health care cost planning; if not, leverage online resources to help facilitate these conversations. Once you need your benefits to kick in (insurance companies require that you are unable to accomplish three activities of daily life; dementia patients are the exception to this guideline), remember that the person evaluating you works for the insurance company, not for you. You may need to enlist the help of a geriatric care manager, if more than a simple follow-up phone call is necessary to access your benefits. Being prepared is the key; don’t wait until you are sick to create your plan of action and list of resources.

Remember the old adage that an ounce of prevention is worth a pound of cure; sacrificing a few nights of eating out a month to set aside funds for your future care will be a decision you won’t regret later in life. Take the time to put the work in now to ensure that you, and your loved ones, can enjoy your golden years as comfortably as possible.

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Megan Hammons

Megan Hammons lives in the Central Texas countryside just outside of Austin, pursuing her love for copywriting after a career in high-tech marketing. She is part of a large, diverse family and enjoys spending time with the multiple generations living in her community.