Considering LTC Insurance? You Might Find Something Entirely Different Is Substituted

So, you’ve decided to investigate LTC insurance.  Now, which type do you look at or might be suggested by the agent?  You can keep things simple by concentrating on just a few important points:

1. How much money will it give me WHEN I NEED CARE?

2. How long will I be able to collect that money?

3. Will the policy increase each year automatically to keep up with the increasing costs?

4. Will it pay MY claim?

Traditional LTC insurance will guarantee how much you get, how much that dollar amount will increase by automatically each year, how many years of care it will pay for, as well as paying when you need assistance with 2 activities of daily living or a cognitive impairment.

The only traditional LTC insurance policy that cannot do the above is the one sold to teachers by their union that will only pay 3/4 of the claim, no matter how much benefit you may have paid for.

Some of the “new” products using life insurance or annuities as their base will only pay out if the need for care is permanent, meaning there is no chance of your recovery, ever.  Others cannot tell you what the benefit will be when claim time comes.  It is only determined at that time by some complicated formula.

Some of these offer what seems like a large amount of money each month to pay for care, but fail to mention that the monthly benefit never changes as inflation eats away at that benefit.  Recall back to what gasoline cost per gallon when you first learned to drive and you will realize that inflation is real.

There are a few of the life/LTC insurance policies that will give you a guaranteed 5% compound increase in your benefit every year.  If this strategy appeals to you, be sure it does include that automatic 5% compound inflation benefit.  Costs of care have been going up a bit slower the past 5 years, but the past 5 years have been the worst economy since the great depression.  With the 80 and over gang predicted to triple in 20 years, and a shortage of caregivers is already evident, cost will go up by at least 5% compound in our foreseeable future.

As you can see, there are many different types of products, with many options, some important, and others not so much.  Rather than purchase something because your neighbor bought it, you might consult with an expert in LTC financing to learn what is best for you.  There are even options for people who have been told they cannot get this coverage, or may already be receiving care in their own home or a facility.

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