If you watch pundits like Suze Orman and others, you’ve probably heard about long term care insurance. Long term care insurance is designed to cover your expenses should you need long term care. It’s a difficult situation when someone needs long term care, and it can also be very expensive. Here is what you need to know.
What Long Term Care is About
Long term care is what about 80-90% of Americans will need at some point in their lives (according to the OECD). It can be as simple as needing a nurse to check in on you once a week, to full-time around the clock care. Long term care is most often provided by family members in an informal home setting, but for many that doesn’t work forever.
The most common types of long term care that require help are ones that do require some medical skills. For example, it could be home health care (including nursing care or physical therapy), nursing home care, Alzheimer’s care, and more.
What are the Benefits
The benefits of having long term care insurance is that, because so many people will need long term care at some point in their lives, there is flexibility in the type of care that you can receive. Getting professional long term care (whether in a home setting or at a facility) is expensive. Many individuals feel uncomfortable relying on their children or family members for support, and they find that paying for professional care is a better option. Having long term care insurance could help cover the out-of-pocket expenses of this care.
The other big benefit, beyond the comfort of not burdening your family, is being able to handle the cost. Long term care is very expensive, ranging from $100 to $500 per day depending on the level of care. As such, a family’s finances could be depleted very quickly if someone requires long term care and there isn’t insurance to pay for it. A year of long term care in a nursing home could easily exceed $100,000 if paid of out pocket. Long term care insurance could help cover this expense.
What are the Disadvantages
The biggest disadvantages are the costs and the rules involved with the policies. These types of insurance plans can be costly, especially if you opt for a high end plan. Realistically look at the options you need, and if the premium is worth it.
Also, many plans have specific waiting periods which act like a deductible. The plan may require you to provide proof of 20 to 120 service days of paid care before any benefits are paid – similar to a deductible for service. Other policies require that the premium be paid for a set period of time before becoming eligible for benefits.
Who Needs It
Almost everyone should have some level of long term care insurance, especially as you get older. If you don’t want to burden your family emotionally or financially, a long term care insurance plan could be the right choice for you.
I was thinking about this the other day. At what age do you think it is a good idea to invest in long term care?
Glen, I just sat in a meeting with my parents and their attorney about this, and the lawyer told my parents they were probably a little behind the eight ball on LTC insurance – they’re 61. He said mid-50s is an ideal age; same goes with getting one last round of term life insurance.
I am actually planning to get a LTC insurance at age 45-50. But early to mid 50s is a good age as well.
It’s not a topic matter that we are comfortable with more often than not because we’re all immortal, right? Well of course we’re not and as the stats suggest, it’s highly likely at some time in our life, we shall be in need of it.
There are far older people around these days, thanks to improved diet, easier lifestyles and better standards of healthcare. The consequence of this is that we are all the more likely to require nursing at some time of our lives. All very nice to think how we live longer, but of course this means often many years where we are not able to look after ourselves.
It’s not too surprising that these premiums are high. I think it’s a foregone conclusion that we are going to require it. However, some of the disadvantages you pointed out are somewhat alarming. I was especially horrified to discover from your post that some require 20 to 120 service days of paid care before any benefits are considered for a payout.
I’ve heard stories of people having their house sold to take care of such costs in institutional care. This again is another alarming fact and all they had worked for and their plans to help their offspring can be gone for the want of a couple of years care. I’d say considering these things, it’s well worth looking into.
What a nice informative also helpful sharing of yours about long term care insurance plan! I think insurance is no need to me but your post is useful, whose need to insurance care plan. Thanks for your well post.