Long Term Care: What You Need to Know
Is This Insurance Right for You?
What Is Long-Term Care Insurance?
Try not to go only on the information provided to you by insurers. There is a lot to be aware of when looking at a long-term care policy. For instance, alcoholism, drug addiction and self-inflicted injury are not covered. Consider making sure you're covered for home nursing as well as hospice and assisted living. When looking at long-term care providers, also check with consumer groups and senior organizations to see any information they have have on an insurer. Chances are, you will not be needing long-term care for many years, and for that reason, you want a reputable, financially solid insurer. There have been cases where the insurer has gone out of business, leaving people without any insurance when they need it.
Long-term care insurance is insurance that will cover all the costs of long-term care needs when you or someone you love is unable to care for him- or herself. But it's an insurance policy that has many positives and negatives, which can make it a more complicated insurance choice than usual.
Why Buy Long-Term Insurance?
Some people will purchase it if they have assets to protect (because Medicaid will take all your assets if you use it for long-term care). Others want to be able to choose a facility or bring in full-time nursing at home if they are unable to take of themselves. (Again, choice is not possible with Medicaid.) Some people buy it because they don't want their children assuming their care. Many believe that if you can afford to pay the premiums, which can go up as much as 30 percent over time, it is a policy worth getting.
What to Consider for Insurance
Not all policies and insurers are the same, so it's important to know ahead of time what it is that you want and expect in a policy. For example, consider premiums and rates. You could buy a policy that will pay out $200 per day for care. You would then decide for what length of time you would pay for this care. In this scenario, three years is generally thought to be the most cost effective length for a policy. Of course, coverage will stop at the end of that predetermined period, regardless of any continued need.
Consider a policy that will adjust the dollar amount of per day care for inflation. Two hundred dollars per day will not go as far 20 years from now. This is important if you begin a policy in your sixties but don't use it until you're eighty. Also, note that your premiums will go up as you age, so you have to factor in that cost.
Coverage
It's important to read between the lines and be sure that you are getting adequate coverage. Experts say that you should be covered for physical and mental disabilities, such as Alzheimer's, with any long-term care policy. Not all insurers offer that coverage, so read the policy carefully. You will probably want to have hospice care, assisted living and home care covered, too.
Other Issues about Long Term Care
When looking for coverage, check into the elimination period--how soon after you buy the policy can you use it? Sometimes it can be a year's wait. A long-term care policy should include coverage for getting help with everyday living and not just medical needs.
Alternatives to Long-Term Care Insurance
Some people choose to give away their assets so they can become eligible for Medicaid. However, there are few, if any, choices for the facilities you go to when Medicaid is in charge of your long-term care.
Other people count on using a reverse mortgage plan. This plan can be workable if your home has a high value and you've paid off most of your mortgage. Also, it would mean you have to stay in your home.
Many people who have the money will choose to pay for their care themselves rather than purchasing insurance. This plan gives you the freedom to have the exact care you want. Still other people work longer, take a part-time job after retirement, rent their home or part of it, and invest the money for long-term care.
Choosing Not to Get Long-Term Care Insurance
You may not find a policy you want, or you simply may not be able to pay the premiums. If either of these is the case, you could consider alternatives to getting long-term care insurance. However, some consumer watch groups believe that long-term care insurance will improve, both in price and policy coverage, as more people enter retirement, so it definitely pays to do your homework.
Peace of Mind
If you can afford a good policy, this can give you some peace of mind. But even if you can't afford long-term care insurance, there are other alternatives for you to use so that you will have peace of mind about your future.
This article is general in nature and does not constitute legal, tax, or investment advice. SunTrust makes no warranties as to accuracy or completeness of this information, does not endorse any non-SunTrust companies, products, or services described here, and takes no liability for your use of this information.
Equal Housing Lender - Member FDIC