Insurance is all about protecting what we have from disaster accidents, death, disability are just a few things we insure against. But as we age, planning to have protection to pay for our care is something not as many people do. Having to pay for medical care in retirement or a nursing home is enough to wipe out savings. But it can be avoided with the addition of a long-term care policy.
These policies pay for care, often a daily amount, if we need skilled nursing care, at home or in a facility. Many falsely believe that Medicare pays for this care when in fact Medicare only helps for the first few months of care. And Medicaid only helps those who have no assets.
Therefore, in order to protect your assets, especially if you want to pass them on, a long-term care policy can fill the financial void.
The amount of protection the policy will provide can vary, but the best way to select a benefit amount is to estimate the cost of care where you will retire. Do a Google search for "cost of long term care" to find estimates, or visit www.longtermcare.gov.
Shop for a policy through an independent broker who can compare policies and the strength of the companies that provide them. Features to look for include:
Coverage length: Few people survive beyond four years when they need daily care. Policies can range from coverage for just a few years to longer. The longer the coverage, the higher the premium.
Elimination period: The time between needed care and the beginning of payments is also flexible. If you have the assets, you could wait longer for the start of benefits to lower the premium.
Disease coverage: Because policies can exclude certain diseases, verify the policy doesn't exclude more common ailments such as Alzheimer's.
Home health care: Most care begins at home and most people want to stay in their home as long as possible. Therefore, verify the policy covers costs at home and doesn't limit benefits below 80 percent of nursing home care.
Inflation protection: Make sure the benefit rises with inflation.
Guaranteed renewability: With this, an insurer can't cancel a policy if there is an onset of early care without yet needing skilled care.
Finally, the younger you are the lower the premium. However, most policies are taken out around age 50, in which at that point the chances of living longer are higher, and the premiums are still affordable.