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| There are many reasons why people buy long-term care insurance. Do any of these apply to you? | ||
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"I don't need long-term care insurance because my children have promised that they will take care of me!" Your children may or may not be willing to take care of you. Regardless, it probably would be unheard of for your children to actually tell you that they would NOT take care of you. In fact, most well-meaning children promise their parents they will NEVER put them in a nursing home. Unfortunately, there is a lot of guilt that children must deal with after making this promise. Let's look at the reality of this promise. If you are 70 years old right now and your daughter is in her 50's, that means that if you reach age 90 and need long-term care she will be in her 70's! Can you imagine a 70 year old trying to take care of a 90 year old? Or, worse yet, what if she needs long-term care before you do? Some other questions to consider are:
"I have a disability income insurance policy so I don't need long-term care insurance." Disability income insurance replaces a portion of your INCOME if you are disabled. It doesn't also provide you with extra funds to pay for the additional cost of long-term care. A long-term care insurance policy can be, however, an excellent compliment to a disability income insurance policy. "All of my assets are protected from being spent on long-term care because they are in a living trust!" A living trust only avoids the lengthy probate
period in your state. Assets that are held in a living trust are counted
as assets when determining Medicaid eligibility. With
a living trust, because you have access to the assets, your state would
require that you spend down those assets first, before qualifying for
Medicaid.
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When you are shopping for long-term care insurance you will find that there are a lot of policies to choose from. Generally speaking, most long-term care insurance policies include similar standard features. Most of the standard features that you will find in the policies that you look at are required by the National Association of Insurance Commissioners. In the next section, we will discuss the benefit choices you have.
Types of Policies
There are three main types of policies: Comprehensive, Nursing Home Only,
and Home Care Only. Not all insurance carriers offer all three. Some insurance
carriers have eliminated Nursing Home Only and Home Care Only policies in
favor of just offering Comprehensive policies. Most long-term care insurance
policies offered today are "reimbursement" type contracts where
benefits are paid only for expenses that are incurred, up to a pre-determined
benefit amount. Indemnity contracts typically pay the entire pre-determined
benefit on a daily or monthly basis.
The following types of care are standard features found in most comprehensive long-term care insurance policies:
Nursing Home Facilities
Assisted Living Facilities (aka: Residential Care Facilities)
Home Health Care
Adult daycare
Respite care
Care coordination
Discounts Available
If you are in excellent health, or buying a policy as a married couple, discounts
offered by some carriers can cut your premiums from 10-30%. Carriers use different
methods to determine who qualifies for a preferred rate. Spousal discounts
may be available as well. Some carriers will offer the discount to the insurable
spouse, even if the other spouse is declined. Some carriers also offer discounts
for multi-lives or employer-sponsored discounts.
Carriers
Not only should you be researching and picking a policy that best fits your needs, you should look at the insurance carrier underwriting the policy. There are four major areas to look at when choosing a carrier.
- Underwriting philosophy of the carrier:
The best carriers are the ones that are responsible with the risk that they insure. If a carrier is insuring people that most carriers would decline, it is possible they would be more likely to have to raise rates in the future. - Pricing of LTC Policies:
Beware of carriers that price their policies "below market price". In other words, their price is far less than the average the other major carriers are charging. If a carrier does this, it is possible that they will need rate increases in the future to pay their claims.
- Experience in the LTC Insurance market:
The best carriers are the ones that are often the largest, have the most policyholders, and have been selling long-term care insurance for a considerable period. These carriers are more likely to have a claim-paying track record.
- Financial strength of the carrier:
It is wise to check out the financial strength and claims paying abilities from several rating agencies. Below is a list of the five main rating agencies with telephone numbers and links to their websites.
Standard & Poors 212-438-2000
Fitch 212-908-0500
Moody's 212-553-0377
Weiss 561-627-3300
