Long Term Care: What Is It? How Do I Choose?
These excerpts are from an article by Amy Pollock who works with LTC Financial Partners (www.ltcfp.com), a long-term care brokerage firm based in Kirkland, Washington. The article was in the Wall Street Journal October 31, 2006 .
Long-term care insurance, as the name suggests, can help pay for extended care, whether in your home, an assisted-living center, a hospice facility or a nursing home. Individuals can buy policies that, among other features, pay a flat amount each day (say, $100 or $150) and cover benefit periods ranging typically from two years to a lifetime. Optional riders to policies can automatically increase daily benefits to keep pace with inflation.
Buyers often err in choosing lifetime benefits coupled with small daily payouts . “ Most people don't understand what `lifetime' means," Ms. Pollock says. "The question is not: How long will you live? The question is: How long will you need care?"
People who reach their mid-60s before requiring long-term care, Ms. Pollock says, will likely spend a total of four to six years receiving care at home, in assisted living and in a nursing home. For people who reach their mid-70s before requiring care, the total drops to two to four years. (end of excerpts)
Cost of a nursing home can range from $35,000 to $50,000 a year depending on where you live. Savings and retirement funds may not last long enough and people hate to see their hard earned money going to pay for this type of care. If your parents have substantial assets, then long term care insurance can be a form of asset protection.
Children can buy the policy for their parents. It would then be protecting your inheritance.
How to choose? This chart is compiled from several sources. The most extensive checklist I found is the booklet put out by the National Association of Insurance Commissioners. http://www.naic.org/ and click on consumer publications.
LTC (Long Term Care) Insurance Checklist
How to compare Long Term Care Insurance companies.
Feature/Benefit |
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Company 2 |
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Insurance company has outstanding financial ratings |
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The agent has experience in selling LTC |
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Is there coverage for home health care as well as adult day care, assisted living care and nursing homes? |
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Is there coverage for conditions like Alzheimer’s or Dementia? |
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Is coverage included for personal or custodial care? |
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Does coverage include equipment and home modification? |
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Does coverage include Respite Care? |
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Late Payment Protection? |
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Guaranteed Renewable? |
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30-Day Free Look? |
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Protection against unintentional policy lapse? |
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Flexible Elimination Period Options? |
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Waiver of premium protection? |
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Inflation Protection? |
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Does it have a death benefit? |
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Preferred health discounts? |
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Spouse or partner discounts? |
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Coverage for inability to perform activities of daily living? |
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Coverage for homemaker services and intermediate nursing care as well as skilled nursing care? |
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This list is not all you will need to know, but it covers many of the key points. Get with a good LTC agent. Check out the cost of LTC if not for yourself, for your parents especially if they are in good health now. Illness or very old age makes this coverage almost not affordable. This policy is a reality check policy. The aging of America is happening.
Tips of the Trade by Mary Roth CPCU