When Should You Buy Long Term Care Insurance?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jun 19, 2018

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Long term care insurance provides coverage to people who may need long term care assistance such as stays in a nursing home, in home health care or day care. The concept of long term care insurance was conceived in the 1980’s, but became extremely popular in the 1990’s when most major insurers sold countless policies to customers.

However, many of these insurers underestimated how much health care costs would increase in the following decade and some have been denying policy proceeds for a variety of reasons – most of them non-legitimate. Even so, long term care insurance can be a viable form of insurance for many.

When to buy

Many parents and grandparents purchased policies for their children and grandchildren soon after birth. While that’s the exception and not the rule, purchasing long term care is definitely less expensive at a younger age. However, like life insurance, many young people don’t consider buying long term care insurance because they don’t really know if they’ll ever need it and it’s an added expense.

Unfortunately, rates skyrocket the older an individual becomes and may be too expensive for those in their twilight years. According to studies, typical annual premiums range from $1,000 or less for someone who is 40, to several thousand dollars for someone who is over 60. Many experts say that purchasing a policy at middle age is probably the smartest way to go as you may have a better idea about the type of care you might need in the future.

Considerations

According to the American Association of Retired Persons (AARP), there are key considerations when purchasing a long term care policy such as coverage, daily or monthly benefit, benefit period, elimination of waiting period, inflation protection and non-forfeiture benefit.

Coverage. You can choose policies that only pay for home care or ones that might include coverage for various care options including home care, nursing homes or assisted living.

Daily or Monthly Benefit. The benefit, whether paid on a daily or monthly basis, is basically what your insurer will pay for care. It’s important to note that you will have to pay for anything over the cost of what is covered.

Benefit Period. This is the amount of time your benefit will last – for example, three years or for as long as you live.

Waiting Period. Most policies contain a waiting period. This means that you cannot collect on the policy until the waiting period – of up to 100 days – has expired. Policies with longer waiting periods generally have lower premiums.

Inflation Protection. Because the cost of health care continues to rise and can be very uncertain, long term care policies may contain provisions for automatic coverage increases or the right to add coverage in the future.

Non-Forfeiture Benefit. This benefit allows policyholders to continue receiving benefits if they stop paying their premiums, but it may add to your future premiums.

For further considerations, click https://insurance.freeadvice.com/insurance_help.php/105_130_174.htm.

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