Determining how much care we need and/or can afford is a challenge. While I believe that most of us would like to stay in our homes until the end, this is often not the case. As we grow older the amount of care needed grows as well and without a family member or friend who is ready, willing, and capable of overseeing the care needed in the home; seeking home care isn’t always an option.
Here are a few subjects to consider when looking for Long Term Care Insurance
- Decide how much money you can / want to pay.
- Decide the amount of coverage you think you may need.
- Choose a daily benefit amount that works for you financially.
- Find deductible elimination periods to match your needs (Example: 20, 30, 90, 100 days)
- Consider a 5% and 3% compound inflation protection options.
- Consult with an independent agent who you can trust.
Many factors play a role in deciding how much coverage you need and can afford. For instance women need long term care for longer periods of time than men, on average thus they need more coverage than their male counterparts. People without hardly anything invested into retirement will also want more coverage to avoid paying out of pocket for any medical needs and to avoid depleting their assets.
First you’ll need to decide on a fixed daily benefit amount. If you’ve planned ahead a bit already or saved a large enough nest egg then considering a co-pay option would lower your premium costs. Doing this can also change your deductible elimination period.
You’ll be able to match your retirement savings “nest egg”. At $130 daily, a $12,000 nest egg could keep you for 3 months at the current prices. The most common deductible elimination period is 90 or 100 days which keeps the premium cost lower. Make sure to keep your retirement savings funded in this circumstance.
You also need to understand the connection between a pool of money, and your regular benefit amount and the amount of time you want your long term care benefits to last for. You can be in very hot water if you don’t plan for the right amount of time.
Considering the different compound inflation percentages is also an important option you’ll have to make. Most insurance agents will suggest a 3% compound inflation protection, but there are other options such as a 5% compound inflation protection rider. If you are 75 years old or under it is immensely important to consider these options. A 5% compound inflation protection will increase your premium, but considering the current inflation percentages in the care area, it is worth the additional costs at the end of the day.
Long term care insurance is not a one policy fits all types, kind of product. You can adjust your coverage amount and add riders for the things you need or want coverage for. Seek advice from a trusted financial advisor and independent agent for all your inquiries about any of the subjects above and lets get started customizing your long term care policy today.