Long-term care is a reality for most retirees. In fact, 70 percent of people turning 65 can expect to need some form of long-term care.1 On top of the likelihood that retirees will need long-term care, the duration for such care can be as long as five years.2 Monthly costs for ongoing care in the United States can also range from $1,500 per month to more than $7,500 per month.3
With this in mind, you may want to look into long-term care insurance (LTCI). LTCI can be an effective strategy to help you and your loved ones shoulder the financial cost of extended care. LTCI can be complicated, however. It is important for you to do your research before you buy. Below are three important questions to ask before buying long-term care insurance:
What is the maximum amount of benefit available?
Two important aspects of LTCI to understand before you purchase are the benefit duration and the daily benefit. Benefit duration refers to the time limit of the policy. For instance, some policies may cover only five years of long-term care. With that kind of policy, after five years you would have to pay out of pocket.
Most policies also have what’s called a daily benefit. Daily benefit refers to the amount per day the insurance company will pay. If your daily long-term care costs exceed your daily benefit, you may have to cover the difference.
In general, a lower daily benefit and shorter maximum benefit duration will decrease the premium. It will also, however, decrease the total benefit.
When will benefits start?
LTCI does not automatically start when you initially need care. Most policies contain what’s called an elimination period. The elimination period refers to the time you will have to wait for benefits to kick in. With some policies you will have to wait 30, 60 or even 100 days before you start receiving your benefits.
Longer elimination periods typically mean lower premiums. They also mean you will have to wait longer for your benefits.
What if I don’t use the benefits?
Not everyone needs LTCI, and you may buy a policy but never need long-term care. So what happens to the benefits for which you have paid premiums? If you are concerned that you will never need extended care, you may want to look into hybrid policies. These policies typically bundle together LTCI with life insurance or annuities, so your loved ones will still receive a death benefit after you pass away.
Ready to learn more about long-term care insurance? Brian Baacke at Baacke Insurance Services can help you evaluate your objectives and needs, and then develop a strategy. Let’s connect soon and start the conversation.
This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
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