What is Long Term Care?
Strategies to Finance Affordable LTC
You may be surprised to learn that most people need less insurance than they suspect. Having a clear understanding of how to investigate Long Term Care Insurance will help you navigate confusing jargon and "apples to coconuts" comparisons. There are strategies to finance affordable LTC.
1. Add some funds out of your own pocket.
Most people need less LTC Insurance coverage than they think. Why? Consider this. When a person needs LTC services their lifestyle changes dramatically. There may be no need for a second car if one person is no longer driving. You will probably not need the motorcycle, the RV, snowmobiles or the boat. If travel is difficult, there may be no more Branson or Vegas trips, cruises, weekend getaways. Even dining out is more limited. The money used for these activities can be redirected toward the costs of LTC.
Adding some funds out of your own pocket to help pay for care reduces the amount of LTC insurance you need. Can the yield from your nest egg be used to help pay for care?
2. Get LTC Insurance earlier rather than later.
Good health is a must to qualify. The longer you wait to apply, the harder it will be to get. If health is a concern, we at The Long Term Care Guy may have options, as we have more companies available than most because LTC is all we do. Sometimes a short duration LTC insurance policy will accept a person with health concerns, giving you some coverage.
3. Consider INFLATION.
Remember the 29 cent loaf of bread? 75 cents for a gallon of gas? Inflation increases your cost, as you will need more dollars for your daily benefit the longer you wait to apply. In the past 20 years the cost of LTC services has been increasing at a rate of 5% to 6% annually. A predicted shortage of workers in the LTC industry will make it necessary to increase wages to fill jobs and result in accelerating costs of care increases.
More people will be in need of care. 10,000 Baby Boomers are turning 65 everyday. This will continue through 2031, straining the LTC system. Therefore the longer you wait to apply for LTCI the more it will cost.
4. Research LTC Insurance, and make sure to compare apples to apples. Consider these questions.
- Is there 5% Compounded Inflation as a benefit? This is critical when protecting your nest egg. At this rate benefits will gradually double every 15 years.
- Are you comparing the same deductible? The same daily dollar benefit? The same length of benefits?
- Are you looking at the same kind of insurance?
5. Be informed about "Combo" products.
"Combo" products that attempt to combine a LTC benefit with other financial products haven't found a way to include the inflation factor in a satisfactory way. Thus, in 10 to20 years (or more), collecting on one of them may be like filling a gas can for 75 cents today. (We at The Long Term Care Guy would offer this type of product if there was one that protects your nest egg in the same manner as traditional long term care insurance with 5% inflation benefit.)
Typically these combo products provide you a return of the money you initially paid in, but not much more. Profitable for the insurance company; very poor protection for you.
6. If you are already receiving care, you may still have options.
Once in care, or a facility, there may be a way to stretch your existing money to pay for care for a longer time. If spending down to Medicaid is your last option.
Ready to find out more?
Let us help you protect some money for your family!