Long-term care insurance

If you are a healthy adult in your 50s or younger, then you may not be thinking too much about what happens as you grow older and start to develop health problems.  It’s just hard to imagine your own mortality and the possibility that one day you’ll be frail and unable to take care of yourself.  But like it or not, as we age, we do develop all kinds of health issues, and even in the closest of families, these health issues can overwhelm even the best-intentioned siblings and children.

As 70 million baby boomers continue to move into senior citizen status, the issue of long-term healthcare has become more of an issue in recent years.  Although only about 8 million Americans are currently covered by long-term care insurance, this number continues to grow as boomers see the wisdom of protecting their health and their hard earned family assets accumulated over a lifetime of work.

Defining long-term care insurance

Most people have some idea about what long-term care insurance is, but to make an informed decision about whether it is right for you or not, it is important to understand what long-term care covers, what it does not, and how it related to Medicare coverage.

According to a recent survey, the cost for a private room in a nursing home can run $100,000 or more annually.  The same survey also found that those requiring less care, such as with a home health aide, would still be responsible for costs approaching almost $50,000.  In expensive areas of the country, those figures could be considerably higher.

Many people are under the assumption that Medicare covers these kinds of costs.  But the truth is, Medicare does not.  These types of expenses are only covered by Medicare after a stay in a hospital.  Those who are concerned about this kind of expense should consider purchasing long-term care insurance.

Long-term care policies vary, but generally, they will cover the following services:

Home Care – provides a person who will come into a policy holder’s home and assist them with daily living activities such as grooming, meal preparation, bathing, and housekeeping.

Assisted living – these are apartment-style residences that can assist people with a variety of services such as meals, housekeeping, and other domestic activities as they are needed.

Adult daycare – just as it sounds, persons are transported to a facility during daytime hours where they have nutrition, health, socialization and other support services available in a supervised setting.

Respite care – sometimes family caregivers need a break, and respite care can come in on a temporary basis to help ease the strain placed on family members.

Hospice care – provides care and services for people with terminal conditions.

Nursing homes – provides a high level of individualized care in a residential setting, offering all types of personal care services around the clock.

Alzheimer’s facilities – specifically designed to meet the unique challenges of those afflicted by Alzheimer’s disease.

Types of policies and costs

There are several things that go into determining the parameters and costs of a long-term care policy.

A Traditional policy will cover you for all of the services above and is straightforward in nature.  However, in recent years, health insurance companies have also introduced Combination or Hybrid policies as well.  Also known as “linked benefit” policies, they combine long-term care insurance with life insurance.  This is sometimes done by adding a long-term care rider to a life insurance policy.  If you never use long-term care benefits, then a portion of what you paid for long-term care premiums can come back to your heirs.  Also, because the long-term care policy is attached to the life insurance policy, sharp increases in premiums are rare, which sometimes is the case with a traditional long-term care policy. Another important benefit with a hybrid policy is that it allows a policy holder to borrow against a life insurance policy to pay for their long-term care needs.

Although long-term care insurance is not cheap, with premiums that can run $300 a month or more, it can still be a wise investment as you grow older.  If you’re considering a policy, keep in mind that the younger you are when you purchase a policy, the cheaper those premiums will be throughout the course of the life of the policy.  Also, since premiums can vary widely, it is extremely wise to do your due diligence and shop around aggressively for a policy that meets your needs.

You can also find flexibility in premium costs if you are willing to trade off some of the services in a policy.  For example, you can place a limit on the length of the policy or the amount the policy will pay out.  Currently, it is estimated that a nursing home private room costs about $250 a day, but by agreeing to coverage that only extends coverage to $200 or even $150 a day, you can shave a considerable amount off of your premium, as long as you are aware that you would be required to make up the difference if you avail yourself of this benefit.  On a related note, when you purchase a policy, costs will be one price, but as time goes by and inflation kicks in, you could be faced with sticker shock which is why you should pay for inflation protection so that you can keep pace with the cost of living.

By delaying the length of time before the policy kicks in, known as the elimination period, you can also save thousands of dollars over the lifetime of the policy as well.

Once a policy has been issued by a life insurance company, it cannot be changed or cancelled for the duration it is in force due to health issues.  It can only be cancelled due to non-payment of premiums.

In addition, if you’re planning on traveling or living overseas, it’s best to consult the provisions of the policy to see if coverage will remain intact in such instances.  For the most part, this is not the case.

Determining factors

When deciding whether or not to issue a policy and how much that policy premium will be, insurance companies consider a number of factors.  Those include:

  • The applicant’s age
  • The amount of the daily or monthly benefit
  • How long the benefits will be paid
  • What the length of the elimination period is
  • Does the policyholder want inflation protection
  • What is the health rating of the policy-holder which ranges from preferred to substandard
  • Will a couple be taking out a policy together, or will coverage just extend to a single person

Working with PolicyZip

Because there are so many variables when it comes to long-term health insurance, you can attempt to try and figure out the best possible policy for your situation on your own, but a better bet is to let a trained professional assist you along the way.

PolicyZip has a team of experienced health insurance agents across the United States who can help you make sense of exactly what you’ll need to be covered in the future.  Our trained staff have been active in the field for a long time, and we can use this experience to your benefit.

To see how PolicyZip can meet your needs, call us at 844-627-7700.