What To Consider When Investigating Long Term Care Insurance

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 oranges" comparisons. There are strategies that help lower the cost of Long Term Care insurance:

1. Add some funds out of your own pocket.

Most people need less LTC Insurance coverage than they think. Why? Consider this. When people need LTC services their lifestyle changes dramatically. There may be no need for a second car if one person is no longer driving. They 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, or weekend getaways. Even dining out is more limited. The money used for these activities can be redirected toward the costs of LTC.

Adding in some or all of what was spent on these things can help pay for care, reducing the amount of LTC insurance needed. Sometimes, the interest from the nest egg can be used to help pay for care without needing to dip into savings.

2. Get LTC Insurance earlier rather than later.

Good health is a “must” to qualify to get a long term care insurance policy. The longer someone waits to apply, the harder it will be to get. If health is a concern, we at The Long Term Care Guy may have options. This is because we have access to more companies than most because LTC is all we do. Sometimes a short duration LTC insurance policy will accept a person with health concerns, giving some coverage.

3. Consider INFLATION.

Remember when a loaf of bread cost 29 cents or a gallon of gas cost less than a dollar? Inflation increases the cost of care, so more dollars will be needed for daily benefit with each month or year that passes before applying.  In the past 20 years the cost of LTC services has been increasing at a rate of 5% to 6% annually. A shortage of workers in the LTC industry make it necessary to increase wages to fill jobs which is accelerating cost of care increases. The longer someone waits to apply for long term care insurance, the more is needed and the more it will cost.

More people will be in need of care. 10,000 Baby Boomers are turning 65 every day. This will continue through 2031, straining the LTC system. The federal department of Health and Human Services says that 70% of those aged 65 plus will need long term care services.

4. Research LTC Insurance, and make sure to compare apples to apples. Consider these questions.

  • Is there an automatic 5% compounded inflation rate built in? This is critical keep up with rising costs. At this rate, benefits will gradually double every 15 years
  • Is the deductible the same? Is the dollar benefit the same? Is the length of benefit the same?
  • Is it pure long term care insurance, or an insurance product that has other features besides long term care? Often, the latter claim to provide long term care coverage that will meet clients’ needs, but turn out to be inadequate.

5. Be informed about "Combo" products.

"Combo" products that claim 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 to 20 years (or more), collecting on one of them may be like filling a gas can for 28 cents today. We at The Long Term Care Guy have not found a product like this that protects your nest egg in the same manner as traditional long term care insurance with 5% inflation benefit.

Typically these combo products provide a return of the money initially paid in, but not much more. This is profitable for the insurance company but provides very poor protection for the client

6. If someone is already receiving care, they still may have options.

Once in care or a facility, there may be a way to stretch existing money to pay for it for a longer time. If spending down to Medicaid is the last option, some money can be protected for family.

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Are you planning to pay out of pocket for care?

What if I could make 2 years of your money last for 5 years of care - without buying insurance? A special savings account pays only 1.75% interest rate, but after exhausting it paying for care, you get over double your account value extra to pay for more Long Term Care. If care is never needed it is always your money in your account which you can withdraw it at any time and leave it to your heirs.