Long Term Care Insurance – A Simplified Overview

 In Community Living, Insurance & Social Security
Woman assisting an elderly person in a wheel chair. Text overlay: Long Term Care Insurance - A Simplified Overview.

Looking forward in life requires planning and insight. One step in that planning is to examine financial preparedness for care requirements that might be forthcoming. Long-term Care Insurance just might be a remarkable tool to cover the costs of home care, assisted living, adult daycare, respite care, hospice care and more.

“As we get older, we may need a little more help. Sometimes we reach the point when we’re unable to care for ourselves—because of an illness, injury, gradual frailty, or a sever cognitive impairment such as Alzheimer’s disease. We may need help with daily activities, or more specialized care. That’s where long-term care insurance comes in—you could receive thousands of dollars in benefits to help pay for the care you may need in the future. Doesn’t that sound better than tapping into your retirement savings to pay for your care?” (Long-term Care Insurance Policy Guide, State Farm Mutual Automobile Insurance, 06-2016, p.1)

Here are some insights to encourage you to consider the possibilities of such coverage.

Continued below…

Ad for Lodge Assisted Living, Coeur d’Alene and Post Falls, Idaho

Here are some insights to encourage you to consider the possibilities of such coverage.

“A complete retirement plan includes coverage for life’s unknowns, including the possibility of needing care for an extended amount of time. A key statistic that you may have already seen is that 7 out of 10 individuals age 65 or older will need some type of long-term care assistance in their lifetime. (U.S. Department of Health and Human Services, National Clearinghouse for Long-Term Care Information, www.longtermcare.gov/the-basics (accessed April 2015).  Since estimated costs can exceed $90,000 annually (John Hancock 2016 Cost-of-Care Survey), choosing to retain the risk of an extended care event can have a devastating impact on your retirement goals. It is important to understand the differences in the options available to you.

There are three broad types of insurance protection that address the cost of extended care.  They are categorized based on your primary need—do you only need coverage for care, or would some amount of benefit available at death also be important?

  • Stand-alone long-term care (LTC) policies provide the most flexibility, but only offer coverage for an LTC event.
  • Asset Based LTC policies provide primarily LTC coverage but also include a death benefit. A death benefit, LTC benefit, or both will be paid regardless of the situation faced by the client.
  • Life insurance policies now include riders that allow all or a portion of the death benefit to be used during lifetime for extended care—the primary purpose however is to provide death benefit coverage.

Each type comes with unique features and benefits that allows for the customization of a plan to best address your needs. For example, some policies include a return of premium (ROP) feature that many clients may desire so they have access to their premiums. Others may have a different definition for benefit payouts that make placing the policy in trust more acceptable (reimbursement vs. indemnity).  …By understanding the choices available, you can begin to build a plan to address the catastrophic impact an extended care event could have on your retirement.” (Wells Fargo Advisors, 1016-04192, p. 1)

Long-term Care Insurance is both comforting and efficient in covering costs incurred during long-term care. Costs in today’s market range from $3,000 to $9,000 per month in many cases.

Experts suggest that decisions regarding Long-term Care Insurance should be made while the consumer is in their fifty’s. Medical information and health history are significant in helping insurance providers make informed policy-approval decisions. Height and weight calculations are used to determine body mass index (BMI), which is also used in reviewing eligibility. Additionally, the complexity of individual medical histories is considered by the insurance underwriters.

These insights are just the beginning of the process of preparation. At The Lodge Assisted Living Homes, we highly recommend that you seek professional guidance in taking steps to plan for the future. Also, we welcome Long-term Care Insurance coverage for our residents and celebrate the relief that it provides.

by Linda Davis, Director of Building Relationships – The Lodge Assisted Living

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