How To Select A Best Long-term Care Insurance Policy?


Do not rush. Don’t hesitate. This is the problem when you are looking into long-term care insurance. It’s something that most people would prefer to avoid thinking about. It’s not something that anyone likes to think about. While deciding whether or not you need coverage isn’t something you should rush to do, it’s a decision you can make sooner than you think.

Assessing whether you need long term care insurance is the first step. This will be based on your individual situation, what type of care you desire, and how much you have saved for retirement. This first article of this series discussed how to look beyond simply calculating your options. This is a major decision that requires careful discussions and weighing all possible scenarios. Once you are confident that long-term insurance is right for you, it’s time to move to Step 2, which is determining the best type of policy to suit your needs.

Are you ready to take the next step in your life? You have come to the right spot. These are the three most important questions you should ask.

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What can I expect from my long-term care insurance policy?

It is important to take the time to learn what long-term insurance is. This will help you to better define your needs and expectations.

Long-term care policies provide support for six essential activities of daily living: dressing, bathing and toileting, transferring, eating, and continence. Long-term care is required if you can’t do any of these six activities without assistance. You can receive the care you need in your own home, or in a facility such as an assisted living or nursing home.

You have the option of purchasing long-term care insurance to help pay for the care that you require. The premium you pay for coverage is paid over time. If you require long-term healthcare, the policy will reimburse or pay some of your long-term costs. It’s like having a bank account that you can use to pay for your long-term care expenses.

There are many policy options, coverage amounts, and features. It is important to understand your financial situation before you begin shopping. It’s also a large financial commitment so make sure you get the right coverage at a price you can afford. Take a look at the previous article to help you assess the financial aspect of your decision. Also, be sure to check out the long-term care insurance evaluation tool that we offer. It provides valuable information about the cost of care in your local area as well as the cost of insurance.

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Talk to your family about your financial and goals as part of your decision-making process. It is important to share your wishes with family members and to get their opinions on how to make it happen. The conversation will help you clarify your intentions and help your family understand your preferences and determine the best coverage.

What kind of long-term care insurance is best for me?

Once you have your goals set, it is time to start looking for coverage. There are two types of policies on the market today: hybrid and traditional. Both offer similar long-term benefits. You’ll have to look at the features of each product in order to appreciate the differences.

Long-term care insurance policies are similar to homeowner’s or auto insurance. The premium covers the cost of your coverage for as long as you are covered. You also get benefits if you require them. You don’t get to recoup your premiums if you don’t use the benefits. This may work for car insurance but the higher cost and longer payment period can make it more difficult to manage the expenses if you don’t need long-term care. The premiums can increase or decrease over time.

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Traditional policies have lower initial premiums than other options. You may be eligible for state partnership programs, which allow you to preserve more of your assets in the event that you lose your long-term care benefits or need to go to Medicaid.

In order to mitigate some of the risk associated with traditional policies, a hybrid policy combines long-term insurance and life insurance. A hybrid policy pays premiums for a short time. It can be paid all at once or over 10 years. This means that you don’t need to worry about not having enough income to pay premiums in 20 years or 30 years. The premium cannot be increased and is guaranteed. Your beneficiaries will receive your premiums back if you die without ever using the long-term benefits. This means that you are guaranteed to at most recoup your premiums through long-term care or death benefits, or a combination thereof.

These guarantees mean that hybrid policies have higher monthly premiums. The cost of hybrid policies may seem higher than traditional policies over a lifetime. However, it is possible to get a similar or even lower premium for hybrid policies.

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We recommend that you consider both traditional and hybrid policies when searching for long-term coverage. You will be able to find the right policy for you, regardless of your gender, age and coverage amount.

One woman’s decision: Traditional vs. Hybrid. A 45-year-old woman, who is single, recently consulted us to explore her options for long term care coverage. A traditional policy offered up to $255,000 in initial benefits, and included a 3% inflation bonus. Her monthly payments were $267. If she ever needed long-term nursing, her payments would continue until then. A hybrid policy cost $692 per month. Her payments stop after 10 years, or when she begins receiving benefits.

We used a spreadsheet for comparison of a variety of scenarios to analyze her situation. Here are the top-level results:

  • She may need a lot more care over the next few years. A traditional policy would be better for her because she would only have to pay a few years’ premiums before they stopped. This is unlikely. The average person who needs care is in their 80s.
  • Around 48% of retirees won’t need long-term or very little care. They don’t have to go through the 90-day period. If she dies without any care or uses very little care, the hybrid option is better as her family gets some interest and her money back.
  • If she is one of the 52% who require some care, then it is most likely that she will not need any care until she is in her 80s. The hybrid policy also makes her more financially secure than the traditional one, considering all the premiums she would have paid.
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The above analysis showed that the hybrid was the better option for the 45-year old woman, provided she can afford the higher upfront premiums. We looked at the same package for a married man aged 71, but the reverse was true so he chose a traditional policy.

To get the complete picture, ensure you work with an expert to help you decide which type of long term care insurance is best for you.

What is the best time to make a long-term care insurance policy decision?

Long-term care costs will be a major expense in retirement. We recommend that you incorporate long-term care planning into your retirement planning.

As young as 30, insurance companies offer coverage. Long-term care insurance is not the most important issue for most people in their 30s. They have other priorities and just starting to save for retirement. You can purchase long-term insurance in your 30s if you have the funds. However, we believe that buying coverage in your 40s and 50s is the best option. Premiums are more attractive and you’re less likely be denied due to medical issues. You’re more financially secure and can make the financial commitment that long-term care insurance requires.

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Long-term care insurance is generally available for those who are 79 years old. Keep in mind, however, that prices can rise quickly and that the chances of getting declined for coverage increase with age. A recent study from The American Association for Long-Term Care Insurance found that only 16% of applicants aged 49 or younger were denied coverage. After age 70, the percentage rose to 44% and 24% respectively for applicants aged 60-64.

To get quotes and to apply for long-term care insurance, you will need to speak with licensed agents. Independent agents are able to help you compare multiple options and find the best price. These questions will help you ensure that your agent is able to assist with comparing policies.

  • Which coverage amount is most appropriate for your budget and goals?
  • What are the differences between the policies you are considering?
  • How would different scenarios affect your costs and benefits?
  • What financial strength are the companies behind these policies?

All of these are important considerations to make when choosing a policy. You won’t get the best coverage for you if you only look at the monthly premium.

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