Important Considerations When Buying Long-Term Care Insurance

Long-term care insurance can be costly, whether purchased through the federal FLTCIP program or elsewhere. The options available in such insurance can be tailored to keep premium costs low, but keep the following considerations in mind:

1. The benefit is received on a daily or monthly basis. At least 60-80% of the cost of a private room in your area should be covered by your policy. If you can’t afford to pay the balance out of your other assets, you should consider buying 100% coverage.
2. The scope of care. Unless you would feel vulnerable or uncomfortable having strangers come into your home and hence do not want in-home care, a policy should pay as much for home care as it does for nursing home care.
3. The duration of the benefit. Purchase a policy that will cover you for at least three years. After a three-year waiting period, you should have a plan to transfer assets and eventually qualify for Medicaid.
4. The period of waiting. The longer you wait before receiving benefits, the lower your premiums will be. A 100-day waiting period will cost you more than $15,000 out of pocket if you earn $5,000 per month. Choose a 30-day waiting period if you’re not willing or able to bear that cost.
5. Anti-inflationary measures. The majority of people will want to be protected in this way. Simple protection will be less expensive than compound protection, and it may be sufficient in today’s low-inflation economy.
6. What happens if you miss a payment? Policyholders who miss a single payment risk losing access to their accounts. However, many organizations provide measures to protect their consumers. Some companies have nonforfeiture options, allowing you to keep a lesser benefit based on what you’ve already paid. Others provide a continuity option that allows third parties to pay for policyholders who cannot do so. For example, if a policyholder misses a premium payment due to an extended vacation or hospital stay, a chosen sibling or adult child can cover the premium payments temporarily.
7. Other advantages. Other long-term care benefits to which you’ll be entitled should not be overlooked. You will most likely qualify for Medicaid, which can cover a nursing home if you have no large assets or income. Thus you will not need any LTC insurance. If you are a veteran or a veteran’s spouse, you may be eligible for up to $1,500 in veteran monthly benefits, so you will likely only need enough coverage to fill the gap.

The more preparation you undertake now, the better off you will be in retirement and aging. The cost is often the largest deterrent to purchasing long-term care insurance. Combining estate-planning strategies like Asset Protection Trusts in addition to your long-term care insurance needs, on the other hand, can often result in a reduction in the amount of insurance required and, as a consequence, a reduced overall cost. 

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Bio:
Todd Carmack grew up in Dubuque, Iowa, where he learned the concepts of hard work and the value of a dollar. Todd spent years in Boy Scouts and achieved the honor of Eagle Scout. Todd graduated from Iowa State University, moved to Chicago, spent a few years managing restaurants, and started working in financial services and insurance, helping families prepare for the high cost of college for their children. After spending years in the insurance industry, Todd moved to Arizona and started working with Federal Employees, offing education and options on their benefits. Becoming a Financial Advisor / Fiduciary can help people properly plan for the future. Todd also enjoys cooking and traveling in his free time.

Disclosure:
Investment advisory services are offered through BWM Advisory, LLC (BWM). BWM is registered as an Investment Advisor located in Scottsdale, Arizona, and only conducts business in states where it is properly licensed, notice has been filed, or is excluded from notice filing requirements. This information is not a complete analysis of the topic(s) discussed, is general in nature, and is not personalized investment advice. Nothing in this article is intended to be investment advice. There are risks involved with investing which may include (but are not limited to) market fluctuations and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making any investment decision. You should consult a professional tax or investment advisor regarding tax and investment implications before taking any investment actions or implementing any investment strategies.