Long Term Care Insurance
People over the age of 55 should make a decision about whether or not
they need this type of insurance coverage. It is also important for young
adults with parents over the age of 55 to be aware of this type of
insurance so that they can guide their parents through the process of
making wise decisions. This is especially true for women. Studies have
shown that regardless of whether sons are in a better position to assist
aging parents, daughters (and daughters-in-law) often find themselves
sacrificing their careers and family life in order to assist in this way.
Long-term care insurance for parents gives the adult children more options
for their own lives.
 Of all the types of insurance coverage that are examined in this
resource, Long Term Care Insurance is the newest product to become widely
marketed. Other types of coverage have been around a lot longer and so
people tend to have more experience with life insurance or homeowners
insurance. Since it is so new, a couple of observations need to be made
about it. First, policies vary a great deal from company to company.
Because they are often not sure how their actual experience will unfold,
policies issued by different companies differ from each other more than
with other types of insurance coverage. For that reason, you will need to
do more research in this area than in any other area of insurance before
making a decision. While this chapter and the internet links that are
provided can assist you in the decision making process, you will need to
dig a little deeper with Long Term Care Insurance than with any other type
of insurance.
Second, you need to understand the two major roles that Long Term Care
Insurance can play in financial planning. It can be purchased as part of a
life plan. If you have a spouse you know that you both are going to age
and that at some point in the future one or both of you will need some
sort of care. You would then purchase a policy to cover you for that
possibility. Your main focus here would be to provide the resources needed
to cover the cost of care when and if you need it.
Long Term Care Insurance can also be purchased as part of an Estate
Plan. An Estate Plan is a plan that addresses how to preserve, maintain,
or liquidate an individual’s assets in the event of their complete
disability or death. You may look at the resources and income that you
will have in retirement and judge them to be sufficient to cover the costs
associated with care but purchase a policy anyway to allow you to maintain
your assets for the next generation or for the causes and charities that
you support. In this case, the decision is not based on providing benefits
but rather on preserving assets as part of an overall estate plan.
Some will find that they have concerns in both areas and so the
decision to purchase a Long Term Care Insurance policy can have multiple
purposes with different families.
In the introduction to this chapter, women are alerted to the fact that
they will want to make sure that there is consideration for this type of
policy for their parents or in-laws but there is an additional reason why
women need to consider Long Term Care Insurance. It is not uncommon for
men to have need of skilled nursing care before their wives. If the
retirement income of the couple is needed to care for the husband there
may not be enough left over on a month to month basis to support the wife
even if she is still able to care for herself. Further, if the assets of
the couple are used to care for the husband, they may be depleted when the
wife needs care years later. For those reasons, it is more likely that
women will experience financial problems associated with the cost of care
than it is for men. At the time that this becomes obvious, it may be too
late for a woman to do anything about it. So…when you consider buying or
not buying a Long Term Care insurance policy make sure that you factor in
as many scenarios as you can and insure against as many of them as
possible.
You need to be aware of some basic terms that relate to levels of care.
First, there is Independent Living. Independent Living facilities usually
have small efficient apartments and are supported in a number of ways by
an association or owner. This can include upkeep and maintenance,
transportation, and housekeeping. Often this includes shared facilities
available to all of the people who are living independently within the
same complex.
Assisted living adds several additional services for people who need
them. Often this includes assistance with meals and laundry. It means that
medical personnel administer medication and additional measures are taken
to insure the safety of residents. Apartments are usually even smaller and
very little cooking is done in the apartments.
Finally there is skilled nursing care. This is usually the highest
level of care and occurs at a time when people are no longer able to care
for themselves. It includes assistance with all the necessary daily tasks
and is also the most expensive. For many of us, this is the thing we fear
the most about growing older. It represents a loss of freedom and autonomy
and we find ourselves living according to a schedule that we may not like
and in close proximity to strangers. It is, however, part of life for many
and you need to be prepared for it.
WHAT TO LOOK FOR IN A POLICY
When looking for a policy, be sure to know if it covers multiple levels
of care. In some instances, buyers may intentionally purchase a policy
that provides benefits when they need one level of care but not when they
need other levels of care. For example, someone may choose a policy that
covers him or her self and their spouse when skilled nursing care is
needed but not when assisted living is needed. This is because they feel
that they have sufficient income to cover the cost of assisted living but
know that when it comes to skilled nursing care that their own income and
assets will prove to be inadequate.
In what settings can the care take place? Will it cover some care
provided in the home? Does it provide benefits for adult-day-care? Does it
provide benefits for all three levels of care mentioned above or just for
one or two of them? Each additional provision for care will increase the
cost of the policy. Find the policy that will cover you and your spouse in
the way that is needed given your unique circumstances.
How long do you think you will need the care? Policies can pay out for
a relatively short period of time (two years) or for life. Two years worth
of benefits will help you keep your assets intact but then what? Try to
get the longest benefit period that you can afford so that you do not find
yourself short of resources at a time in life when it is impossible to do
anything about it.
How much do you think you will need each day? Do you want a policy that
provides a set amount each day or one that pays the average daily cost of
care for your area of the country? Again, with each increase in possible
benefit comes an increase in premium.
With costs escalating rapidly, do you want a policy that has some sort
of inflation protection? Some policies will guarantee higher payments that
keep pace with increasing costs after you file a claim.
Keep in the mind the two purposes for Long Term Care insurance that
were mentioned earlier. If your planning leads you to believe that you
need it to protect your self or your spouse against the costs of care or
if you need it to protect your estate for inheritance, then you really
need to seek out insurance coverage. More than with other types of
insurance, the web sites include links to companies that will be offering
policies. You will need to be very careful and use the information found
in this chapter to evaluate the policies found there.
WEB SITES:
http://www.iii.org/individuals/health/
http://consumerlawpage.com/article/insure.shtml
http://www.mostchoice.com/p_ins_long_term_care_overview.cfm
http://www.mrltc.com/
http://www.hiaa.org/consumer/guideltc.cfm
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