Long Term Care Insurance - What Is It And Should You Have It?
What Is Long Term Care Insurance?
Long-term care (LTC) is any personal assistance you need to maintain your quality of life as you get older or become ill. The exact percentages vary depending on what study you look at; however, pretty much all studies agree that more than half of people age 65 or older will need LTC at some point.
What Does Long Term Care Insurance Cover?
Long Term Care Insurance is designed to help pay for those LTC costs that may be occurred due to old age or becoming ill. A common misconception is that LTC Insurance will only pay for nursing home expenses – that is incorrect.
LTC Insurance can help with a variety of costs including but not limited to:
In-home care
Home modifications
Adult day care services
Care coordination
Assisted living facilities
Nursing home care
How The Policy Works
When LTC Insurance was first released the majority of policies were standalone (use it or lose it) and paid on a reimbursement basis. While those type of policies do still exist, many other options have been added greatly improving the coverage and experience for most insured.
Hybrid Life & LTC Policies
These policies are becoming increasingly popular and combine your life insurance with LTC coverage. One of the major benefits of a hybrid policy is for those who don’t need care the policy would still pay a death benefit to your heirs. This is also typically a more cost-effective entry into LTC coverage for those that are already paying for life insurance.
Reimbursement vs Indemnity Style Payout
The other major change in the LTC insurance industry is the introduction of an indemnity style payout. Traditionally most LTC policies paid out on a reimbursement basis, meaning you had to pay the care provider yourself and then submit a receipt to your insurance company (and hope to get reimbursed). Many carriers now offer indemnity style payouts, which means as soon as you medically qualify for converge the insurance carrier starts paying you the full payout directly. This makes the administrative process much easier and leads to a much more positive customer experience.
When Is The Right Time To Buy A Policy?
Similar to life insurance, the earlier you buy coverage the better. Prices are less expensive when you are younger. Also, buying when you are still healthy makes it more like you will be approved for coverage. The most popular time to start making a LTC plan and purchase coverage would be in your late 50’s or 60’s.
Paying for LTC expenses out of pocket isn’t practical or cost-efficient for most people. Everyone ages 65 or older should have some kind of plan for how they would pay for LTC expenses. LTC insurance is great solution or part of a larger plan for everyone to consider.