Long Term Care Highlights
By Joel Zimmerman

LTC Insurance: An Essential Part of a Financial Plan

LTC, or Long term care insurance is an integral part of any retirement plan. Unfortunately, many people fail to factor in LTC coverage when planning for their retirement. By neglecting to consider the need for senior care when preparing a retirement plan, families are often left facing the need for extended care without having the proper knowledge or resources to handle it.

There is a common tendency to associate long-term managed health care with nursing homes, whether in old age or as a result of illness/injury while still young. The fear of living in a nursing home can be daunting for many people, causing a mental block against LTC insurance too.

Today, however, there are many different types of managed care or long term care options covered by LTC insurance, including home care, assisted living facilities, supportive housing programs, continuing care retirement communities (CCRCs), as well as nursing homes.

How LTC Insurance Works

Long term care insurance is an insurance policy that pays for LTC services in settings like homes, assisted living facilities, nursing homes, etc. The key benefit of a long-term care policy is that people do not to exhaust their lifelong savings to pay for senior care costs.

Like life insurance plans, companies issue cheaper LTC policies only to individuals who meet their health guidelines. Thus, it is best to apply when one is young and healthy. When applying for long term care insurance, it’s important to be truthful and thorough; concealed information or verifiable facts may result in a cancellation of the policy by the insurer.

There are different policies, each with its own “benefit trigger”—the condition which must exist before the commencement of LTC benefits. A tax-qualified policy only pays benefits when the person is certified as suffering from a chronic illness/disorder like Alzheimer’s, lasting at least 90 days. Moreover, they must have a care plan prescribed by a professional healthcare practitioner. A non-tax qualified policy is less restrictive.

Before an LTC policy is triggered, there is typically a waiting period, during which time the individual will have to pay for any healthcare costs incurred.

Can You Cover LTC Costs Without Insurance?

Whether or not a person can cover long term care costs without an insurance plan depends entirely on their unique situation and circumstances. Every able individual should consider LTC when planning for their retirement, to prevent family income or retirement funds from being drained on senior care costs, which are spiking on a near-daily basis!

How Much Does Coverage Cost?

When taking out an LTC policy, the buyer must pay a predetermined premium. The insurance will then cover the costs of senior care services when the need arises, up to the coverage limits.

The costs of LTC coverage vary with each individual, depending on several factors like:

  • Age – The person’s age at the time of application is very important. The younger they are, the lower the premium is likely to be.
  • Type of Policy – Different life insurance and LTC policies entail different costs.
  • Type of Coverage The type of coverage that will be provided, whether it will cover home care, etc.
  • Health – The buyer’s health when applying for the policy is also a factor. If there are any health complications, the premium will be higher.
  • Benefit Amount and Duration – Policies with longer payouts and higher benefits are costlier.
  • Area – Long term care insurance costs may different between different areas.

Four Reasons You Need Long-Term Care Insurance

Here are four key reasons for buying long-term health insurance:

  1. It prevents depletion of finances.

    People work their entire life to accumulate sufficient funds for their families. They plan for a happy and stress-free retirement, but fail to consider the fact that when old age sets in, healthcare costs can eat up a huge chunk of their money. LTC insurance helps to protect family finances from being exhausted on medical care.

  2. LTC insurance offers a very important benefit: independence.

    Most people are scared of old age as they are afraid of becoming a financial burden on loved ones. Long term care policies assist senior citizens with medical costs and prevent them being completely reliant on family members, increasing their independence and dignity.

  3. It keeps your assets protected.

    LTC coverage provides an individual with the satisfaction that their wealth will remain intact and not expended solely on medical coverage. This peace of mind is a very important consideration for those who want a retirement that’s free from stresses or worries.

  4. It improves liquidity for daily LTC expenses.

    LTC policies provide easy cash flow and liquidity to cover every day long-term care expenses. This is particularly important for people whose portfolio consists of considerable fixed assets but a limited amount of ready cash resources.

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