Long-term insurance is a service that is more effective than regular health insurance. It helps assist those who need help with daily activities such as getting dressed, getting out of bed, and taking a shower. Long-term care — LTC — insurance is generally bought when individuals reach their mid 50’s. LTC covers care for those who have a chronic or severe medical condition. Typically, most insurance companies will cover your care in a number of places:
● The home you reside in
● Nursing home
● Assisted living home
● A day care for adults
Why should you buy LTC insurance?
It has been statistically proven that from the U.S. Department of Health and Human Services that 70% of 65 year olds will use some type of long-term care. LTC differentiates from other insurances because it covers daily care and does not limit you to a short stay at a nursing home. LTC insurance is bought for two reasons:
1. Protect your savings: Unfortunately, LTC can hit your savings hard if you don’t qualify for LTC insurance. A general cost for a private nursing home a year is $80,000 and if you don’t qualify, you will pay that out of pocket.
2. Give you a variety for care: Obviously, if you have more money to spend, the more of a quality home and care you will receive. If you qualify for LTC, then you will have more choices to pick from and they will generally be higher quality.
If you have low income, LTC insurance might not be affordable for you. It is recommended that you spend 5% of your income on LTC claims.
How does LTC work?
When filling out your LTC application, you can either do this online or go to a local office where an insurer can help you. You will be answering some health questions and medical records may be asked to provide. You will select the amount of coverage you want and the policy caps the amount that is paid each day during your lifespan. When you are approved, you will start paying for premiums. Generally, you’re eligible for LTC benefits who you cannot perform at least two of these “activities of daily living”:
● Caring for incontinence
● Getting dressed
● Feeding yourself
● Getting on and off the toilet
● Getting yourself in and out of a chair
With most LTC policies, you will have to pay out of pocket for either 30,60, or 90 days before your insurance can reimburse you for the care you have received. This is referred to as the “elimination period.” As you plan for your long-term financial plans, it is important to consider LTC. You can speak with a financial advisor about this and decide if you should buy LTC insurance and if it’s the right decision for you.