Long-Term Care Insurance: Understand Your Options
Although America as a nation is aging rapidly, many people avoid thinking about the day when they or a loved one will need long-term care services and, therefore, fail to plan. Others wrongly assume that Medicare or standard health insurance policies will cover the costs of long-term care services. This article provides an overview of long-term care insurance, covering issues such as when to purchase coverage and what to look for in a policy.
Long-Term Care Insurance
The aging of America is one of the biggest factors contributing to the growing interest in long-term care (LTC) insurance. According to U.S. Census Bureau data, the median age in America has been rising and the last of the 76 million Baby Boomers will reach age 65 by 2030 — doubling the elderly population in America.
The U.S. Department of Health and Human Services estimates that about 40% of people aged 65 or older have at least a 50% lifetime risk of entering a nursing home. For its part, the Health Insurance Association of America estimates that by 2020, 12 million people may require long-term care.
At a time when the average cost of a private room at a nursing home tops $74,000 a year, long-term care insurance can be a solid investment for individuals who have assets they want to protect or who want to avoid becoming a financial burden to their family. But unlike other types of insurance, in which policies are standardized or fairly straightforward, long-term care policies are complex and vary widely. Virtually every company’s policy differs on such matters as who qualifies for coverage, when the policyholder can begin receiving benefits, the amount of coverage, the term of the policy, and premium costs.
Before you begin comparing policies on a feature-by-feature basis, it is important to understand some of the basics.
What Long-Term Care Insurance Is — And Is Not
Long-term care insurance is not life insurance, disability insurance, or health insurance. Read more
How to help your parents get their financial house in order
You, Mom, Dad — and an adviser makes four
How to help your parents get their financial house in order
Like too many Americans, he’s been diagnosed with cancer, in his case stomach cancer. I’ve known their financial needs would fall on me some day, so I’ve always taken a keen interest, even going so far as to pay for their long-term care insurance.
But this time, Dad is really feeling the pressure: Dealing with leaving a job at 78 (yes, one of the lucky ones to still work), paying for astronomical health-insurance costs and related bills, wondering whether to stop paying for life insurance that one planner called “a rip-off,” and trying to let close friends manage what little savings they have.
And now, coping with the uncertainty of his cancer, wondering “did they really get it early enough?” Time for chemotherapy … and time for a financial intervention.
Don’t do it yourself
My husband is right: Trying to oversee their finances and provide guidance is like having “Miss Know-it-all” tell them they did wrong. It’s not healthy for good family relationships and, most importantly, it stands in the way of making quick and efficient progress on their finances. Read more