Long-term care insurance helps to cover the cost of your long-term care. Although policies differ, most will pay toward:
In most cases, a long-term care insurance policy will pay up to a certain amount per day until the policyholder reaches a lifetime limit. For example, a policy may pay up to $170 per day with a lifetime cap of $1 million.
To get coverage, you’ll need to pay an annual premium. Most policies allow you to make monthly or quarterly payments rather than a yearly lump sum to make premiums more manageable.
There are a number of benefits to purchasing long-term care insurance, including the following.
Long-term care insurance policies give you the flexibility to choose the type of care that’s the best fit for your needs. It can allow you to age in place and get care at home when you need it or make it possible for you to move to an assisted living or other senior living community if you wish.
Generally, the cost of premiums for a long-term care insurance policy is much less than the cost of long-term care. As a result, it can make everything from memory care communities to adult day care accessible to those who otherwise might not be able to afford care.
Once you have a long-term care policy in place, it will usually remain in effect for as long as you continue to make premium payments. Knowing you have a way to pay for long-term care if you ever need it can allow you to enjoy your golden years with less concern about the future.
If you have a long-term care insurance policy, you won’t need to worry about having to drain retirement and savings accounts or sell your assets if you need care in the future. You can preserve your wealth to pass on to your family by using your policy to pay for any care you require.
Although long-term care insurance has many benefits, there are some potential downsides to policies. Carefully weigh the following drawbacks against the advantages of coverage before purchasing a policy.
Most long-term care policies will only begin paying for care if you’re unable to perform a certain number of daily living tasks, such as:
Some policies will pay for coverage if you’re unable to perform just one daily living task. Others may require you to need assistance with two or more tasks, giving you less control over when you can begin receiving long-term care.
Long-term care insurance doesn’t come with guaranteed acceptance. Insurance companies may reject your application if you have certain medical conditions. In most cases, you won’t qualify for a policy if you have an immediate need for long-term care.
Most policies come with a waiting and elimination period. A waiting period starts as soon as you purchase your policy. During this time, the policy won’t cover any long-term care costs. Elimination periods start on the first day you begin receiving care and usually last for 30, 60 or 90 days.
Although long-term care insurance premiums do cost less than long-term care in most cases, they can vary widely based on your age, the type of policy and the daily and lifetime limits. For some people, premiums may not be affordable, and some policies allow insurance companies to raise rates, meaning costs may go up in the future.
The best time to buy long-term care insurance is well before you need it. Because age is one of the key determiners of cost, purchasing a policy early can help you get the best possible rate. Applying early can also reduce the risk of being turned down due to preexisting conditions.
Before purchasing a policy, consider your financial situation carefully. Low-income adults who qualify for Medicaid may not need long-term care insurance. You may also have long-term care coverage available through a life insurance policy that's already in place or have enough money saved to pay for long-term care out of pocket.
If you decide long-term care insurance is right for you, obtain quotes from several insurers. Read policies carefully, and compare the premiums, waiting and elimination periods, daily living task requirements and daily and lifetime caps. Doing so will help you choose the one that best fits your budget and fully meets your needs.
