Life Insurance Basics
What is long-term care insurance?
A long-term care insurance policy pays you a daily benefit to
cover the cost of long term care. Long-term care is ongoing care for
people with chronic disabilities. It includes custodial care --
assistance with activities of daily life like eating, bathing and
getting dressed -- in a nursing home, an assisted living facility or
in the patient's own home.
Do you need it?
This type of care isn't covered by regular medical insurance
policies or by Medicare, and it can be enormously expensive. The
average cost of a year in a nursing home today is $40,000; in some
parts of the country, it runs to more than $80,000. Government
studies indicate that 40% of Americans over age 65 will eventually
need some type of long term care. Long-term care insurance is
essential if you are concerned about protecting your assets and
maintaining your financial independence throughout your life.
What to look for in Long-Term Care Insurance
Good Benefit Triggers
Benefit triggers are what cause benefits to start being paid.
Your policy benefits should be triggered if you need assistance to
perform at least two of the activities of daily living (ADLs), which
include bathing, dressing, eating, toileting, continence,
transferring (moving from a bed to a chair) and taking medication.
Another trigger should be "cognitive impairment," which means
coverage applies if you are mentally impaired (with Alzheimer's
disease for example) even if you're physically able to take care of
yourself.
Home Health Care Coverage
You will want to make sure your policy pays benefits for care at
home as well as in an institution such as an assisted living care
facility or a nursing home.
Guaranteed Renewable
This feature ensures that you will be able to continue your
coverage without undergoing additional medical exams
Inflation Riders
An inflation rider will increase the benefit amount by either a
simple or compound inflation rate each year the policy is in effect.
This can be a costly feature, but it is protection against the
rising cost of long term care. It provides that the policy is much
more likely to pay an adequate benefit in the future.
How much coverage do you need?
Policy daily benefits can provide up to $300 a day. How much you
need depends on what costs are in your area for assisted living
facilities, nursing home and home health care as well as how much
you could pay for from other resources, like savings and
investments.
