4 Important Things To Consider When Purchasing Long Term Care Insurance
Purchasing Long Term Care Insurance (LTC) can be a very wise investment to make sure you receive quality care that you need later on life. Long-term care insurance covers expenses related to long-term senior care, in-home or in an assisted living community, nursing facilities and more. Having this insurance can help cover expenses that you may otherwise have to pay for yourself. Although there is no guarantee that you will use it, having it can provide peace of mind for aging adults. While it is a smart and practical investment, there are important things to note before going out to purchase a Long Term Care Insurance Policy. Not every policy is the same and there are varying nuances that could prevent you from seeing the full benefit of your policy later on in life.
- When you purchase matters
According to the American Association for Long-Term Care Insurance (AALTCI ), the best time to start looking into options is when you are in your mid-50s. Although it is never too early to start researching your options, purchasing any earlier could result in wasting money on a policy before you need to. This is because most adults are assumed still relatively healthy at this age without any imminent disabilities. At this age, you can still pay your premiums for a few years without needing to file a claim with the insurance carrier. Alternatively, the longer you wait past 55, the more expensive coverage can be. If you have pre-existing health conditions or decide to wait past 70 to purchase you will be at risk of not having any coverage at all.
- Policies can be expensive
It is no secret that purchasing Long Term Care Insurance can be very costly. Several factors influence pricing such as the type of care you may need and your age when you apply. Typically the older an applicant is, the more likely the premiums will be higher. Each insurer sets its underwriting standards that make the price vary between insurance carriers. According to The Balance, annual premiums can cost as much as $2,550 for individuals and nearly twice as much for couples sharing a policy. Moreover, the price of your premium is subject to change over time. Historically, state regulators have approved insurance companies to increase the price of premiums to offset the fluctuation in claim payments. The possibility of a premium increase should factor into your budget for future payments.
- The Elimination Period
Most policies having a waiting period attached to them called the “Elimination Period”. This is how long you have to wait after an injury or illness occurs before benefits will start to pay out. These periods are in 30-day increments ranging from 1 month to 3 months. During this interim period, any medical-related expenses will have to be paid out of pocket by the policyholder. Usually, the longer your elimination period is the lower your premium will be. The elimination period that you choose should align with your financial situation and your ability to cover your expenses until the period is over.
- Know all of the details of a potential policy
It is important to know all of the caveats and nuances that are in your insurance policy. Because of the nature of the industry, the standards used to underwrite policies today are different than they were many years ago. Some insurance companies place restrictions on which facilities you can receive assistance from and may require the facilities to have specific licenses before paying claims. Others may require in-home nurses to be skilled and certified in certain practice areas before paying for their services.
Most policies also require you to qualify for benefits by meeting “benefit triggers”. The benefit triggers are defined in your policy as Activities of Daily Living (ADLs) you must need help with before your policy starts to pay out. These include everyday activities you may otherwise be able to do on your own such as bathing, dressing, and eating. Most plans pay for care up to a daily limit before you hit the maximum lifespan.
It is best to shop around for quotes and pricing amongst insurance carriers to make sure you are getting the best deals for your money. As stated before, not all long-term care insurance companies work the same and the lists of what they cover widely vary. Consulting with us, your financial advisor, can help you choose the right plan that would provide you with the most benefits for your specific life plans.