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When Should I Buy LTC Insurance?

A recent article on Fox News, featuring a financial expert who shall remain nameless, stated that since there is only a 1% chance of needing Long Term Care until after 60, don’t spend a dime on it until then.  Perhaps he is not aware of the statistic that 40% of Americans currently receiving LTC services are between 18 and 64.

Statistically that means that the majority of people needing LTC services are over 65, he is correct there.  However, to buy LTC insurance you have to be in good health, and by 65 nearly a fourth of us cannot qualify to buy it.

You might suspect that like life insurance, a past heart attack could be a problem.  Actually, no, as the next one might kill you and death is the end of a claim.  LTC insurers like death, its lingering they are insuring against.  Thus they are concerned about strokes (which disable), joint trouble, osteoporosis, Parkinsons, and diabetes.

Diabetes has a strong link to Alzheimer’s disease, if you are diabetic you have a 65% greater chance of developing Alzheimers.  In some circles they are calling Alzheimers type 3 diabetes.  And that is not even counting the lost toes, feet, eyesight, etc.

Weight is not too big a concern, which should make some of us happy, as the underweight frail are more likely to need help soon than the moderately overweight.  Likewise joint replacements are fine, that joint is brand new (once you have completed recovery).

Things on your medical record that are not a problem now, but could lead to problems in later years are also trouble.  Some baby boomers, concerned about aging may ask their doctor if their memory is ok.  After a quick cognitive assesment you may be told you are fine, not to worry.  The problem comes when the doctor makes a note in your medical record that you were concerned about your memory.  The insurance companies are not about to take a chance that the doctor simply did not pick up on a very mild cognitive impairment that only you noticed and you are declined for coverage even if no problem ever surfaces in the future.

So, when is the best time to investigate LTC insurance?  When it is affordable would seem the proper answer.  When you have money at the end of the month instead of month at the end of the money is one indicator.  It must be affordable now and going forward.  However, the longer you wait, the more of a gamble your health becomes and the more the policies will cost (longer life expectancies equal longer lingering at the end).  This year many companies are changing to gender specific rates, meaning women (80% of LTC facility residents) will pay 30% to 40% more.  Not all companies have adopted this yet, you might beat the increase.  Lastly, inflation in costs, as well as in the benefit which increases automatically to match, means each year that passes means a larger and more expensive purchase.

My policy started 12 years ago and will double in what it pays out every 15 years.  If I waited 15 years I would buy twice as much, pay more per unit due to my age, and have to worrry about health issues besides the fact that policies are more expensive now due to increased life expectancy.  If you are starting to experience health concerns, maybe you should see me before confirming what you suspect might be a problem.

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The Long Term Care Guy