What’s long-term care insurance?
Long-term care insurance is an insurance policy designed to reimburse you for expenses that could result when you reach an age when you are unable to take care of yourself. This is usually considered the point when you are incapable of performing day-to-day tasks such as washing, eating and getting dressed on your own.
Is it likely I will need long-term care insurance?
People are living longer and longer. The longer we live, the more likely we will require long-term care. Some of us will require long-term care earlier than you might think. Take a look at these facts:
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Our life expectancy at birth is approximately 77.5 years and increases to 83.4 years at age 65 and 86.8 years at age 75.
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People aged 65 or older face a 43 percent chance of entering a nursing home. Of those who do enter a nursing home, 21 percent will remain there for at least five years.
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In 2008, 21 million people required long term-care and 70 percent of people over 65 need long-term care.
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Of those who have long-term care needs, 40 percent are ages 18-64.
How does long-term care differ from medical care?
When you receive medical care, you hope to cure the condition or improve your ailment. Long-term care is different than medical care. Long-term care helps people live as they are now and may not help to improve their medical condition.
Where is long-term care provided?
Long-term care is necessary for individuals who need assistance with the activities of daily living. Such care typically takes place in:
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Adult day care centers
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Assisted living facilities
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Nursing homes
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Hospice facilities
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Your home (80 percent of all long-term care is provided at home.)
What does long-term care insurance cover?
Long-term care insurance generally covers home care, assisted living, adult day care, respite care, hospice care, nursing home and Alzheimer’s facilities. If home care coverage is purchased, long-term care insurance can pay for home care. You must read the policy carefully and understand it before you begin paying your premiums.
How is long-term care paid for?
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Personal resources
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Long-term care insurance
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Medicaid for those who qualify
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While Medicare may pay certain costs you should not rely on Medicare to pay for your long-term care needs.
Who offers long-term care insurance?
Through group or individual policies, insurance companies offer long-term care. Policies may be offered through:
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Insurance companies over the internet or insurance agents
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Your private sector employer
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Your federal government employer
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Your state government employer
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Various associations
Long-term care insurance is a relatively new insurance product. Many insurers have stopped writing long-term care because certain assumptions used, including interest rate and number of individuals who decide to drop policies, have not materialized.
Phyllis Shelton discusses the fact that not everyone is insurable in her book entitled Protecting Your Family With Long-term Care Insurance.
What about the cost of long-term care insurance?
The cost of long-term care insurance continues to rise. This has occurred because many insurers are making their underwriting criteria more difficult or they are getting out of the business completely. You must also remember the cost of long-term care insurance rises as you get older. Read the terms and coverage of your policy carefully as the impact on cost is significant. Tax deductible insurance products can reduce the cost of the policy on an after tax basis.
Have you considered purchasing long-term care insurance? What factors have you considered in your search for long-term care insurance?
Very informative article.
I think a follow up article that discusses the specific terms would be beneficial. There are significant issues pertaining to policy caps, waiting periods, starts and stops in coverage and many more factors that individuals should be aware of.
Thanks for your ideas! Great idea to have a follow up article to expand upon the terms used by long-term care insurance providers.