Long-term care insurance covers long-term services and supports for when you can no longer care for yourself independently, whether in your home, an assisted-living facility, or a nursing home. Long-term care insurance policies reimburse a pre-selected daily amount to cover caregiving assistance with activities of daily living, such as bathing, dressing, or eating. Insurance providers allow you to choose a policy that covers the level of services, in your home or in an outside facility, that you think you will need as you age. Many long-term care insurance shoppers balk at the premiums and don’t purchase coverage at all, until it becomes a pressing need. Here’s how to get a policy that will cover your eventual long-term care needs at a price you can afford now.
- Buy coverage as soon as you can afford to.
The key to getting long-term care insurance with an affordable premium is to purchase your policy when you’re relatively young. Most carriers will sell you long-term care insurance up to age 75, but you’ll pay more if you’re older or have certain pre-existing health conditions. But don’t be discouraged if you’ve put this off until you’re a bit older. Apply at least 60 days before your next birthday, and most companies will quote you a price based on your current age.
- Keep your budget in mind, but also your coverage needs.
Decide what coverage you think you’ll need and how much you’re willing to spend. Don’t buy a particular policy if you know you can’t pay the premium. If you can’t find a long-term care insurance you can afford, a financial advisor can help you explore your options. Medicaid, the federal and state insurance program for low-income residents, will pay for nursing home care, but not until you’ve exhausted your savings first, which can cause financial strain for your family.
- Be realistic about aging and the care you’ll eventually need.
Nearly 70% of today’s 65-year-olds will require some form of long-term care services, according to 2020 data from the Administration for Community Living, and a study from PricewaterhouseCoopers finds that average lifetime cost of long-term care for one person is $172,000. But few of us want to think about that—until we have to.
The first thing most people think of is “the dreaded nursing home,” but, in reality, most professional long-term care takes place in your home, as long as your health allows. Make sure to purchase at least enough coverage to pay for a few years’-worth of home health care. According to the Genworth Cost of Care Survey, the average annual cost of a full-time home health aide in the Chicagoland area is $60,632. A semi-private room in a nursing home costs about $96,908 per year in this area, so if you do end up needing to move to a nursing home, a policy based on in-home care estimates will still cover a good chunk of the cost.
- Don’t get distracted by pricey add-ons.
Ask your agent for quotes for different levels of benefits. Avoid adding riders for things you’re not likely to need. One example is a restoration of benefits rider, which lets you resume using your long-term care benefits if you stop needing care, but this is rare. Most people, once they start needing long-term care, will continue to need caregiving.
You don’t have to purchase a policy that covers 100% of the likely cost of the care to make a long-term care insurance policy worthwhile. Consider the costs you can handle on your own and what you want to cover via insurance.
At Kamm Insurance Group, we can help you find a long-term care insurance policy that meets your eventual needs at a premium you can afford now. Don’t make the mistake of waiting until it’s too late to think about paying for long-term care!