Long Term Care
There's a good chance that one day you may need to pay for nursing home, assisted living, or home health care. In fact, more than half of the U.S. population will require long-term care at some point in their lives.
Are you concerned about being financially secure during your retirement years, you owe it to yourself and your loved ones to protect yourself against what could be the greatest threat to your financial security, the cost of a stay in a long-term care facility.
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The companies we represent are listed below.
Allianz * Genworth Financial * John Hancock * Prudential
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For more information or to receive your "FREE" quote comparison, complete our "Contact Us" form or feel free to call us right away! ___________________________________________________________
Long Term Care Insurance A Good Hedge; Don't Put It Off Too Long
It's a good bet that you'll live longer than previous generations in your family. But is it a good bet that you'll be able to afford those extra years? That depends on how you plan for the future -- both the ordinary costs of living longer, and the extraordinary costs if you need care because of a physical or mental incapacity.
Americans are in denial about this oncoming crisis in costs of care. Maybe that's because we figure the government will come to our aid. Think again! Medicare only partially covers up to 100 days of skilled nursing care and you are responsible for a daily dollar amount beyond the first 20 days. State Medicaid programs will pay for your custodial care -- but only in Medicaid-funded nursing homes that are woefully under-funded.
Relying on Medicaid disqualifies the possibility of care at home or in an assisted living facility -- much more appealing choices. And you'd have those choices if you purchased long term care insurance as you reach age 50, when you are still young and healthy enough to qualify for the best policies at the lowest prices.
One critically important thing to keep in mind when purchasing long term care insurance is that before you can access the benefits, a licensed medical professional must "certify" that you need substantial assistance in performing at least two of six basic activities of daily living (such as dressing, bathing, toileting) or be "cognitively impaired" before the coverage will start paying your costs. You can't simply decide that it would be nice to move into an assisted living facility, and have your insurance pay the costs!
There are many variables in coverage, which offer even lower prices for less comprehensive benefits. So it's best to work with an agent who specializes in this type of policy. Many are independent, and can show you policies from all the major insurers, including John Hancock, Genworth, and Prudential. You want to make sure you're dealing with one of the larger, more committed companies that are pricing policies appropriately to try to avoid future price increases, and also will be around if you ever need to use these benefits.
John Hancock is well-known for its "shared care" policies, which allow a couple to share the benefits of each policy. It's based on the statistical likelihood that only one of the couple is likely to need long term care, but also on the fact that you never know which one will need the coverage. The first one to need coverage can use the entire benefit, and then use the partner's benefit as well. But if the first to need care uses only two years of benefits, the balance of his or her benefits are added to the spouse's coverage.
This type of shared care policy costs a little more, but takes care of a situation where one person needs care for the longer term. Of course, the danger is the first to need care uses all the benefit. Then the survivor is out of luck! One potential drawback of Long Term Care insurance policies is that they are limited to the daily or monthly benefit amount you have purchased. (Lifetime coverage is very expensive.)
Procrastination is absolutely the most costly enemy when it comes to purchasing long term care insurance. Prices rise sharply as you get older. Plus, you might not qualify for coverage if you have a pre-existing condition. We all hope we'll live comfortably into our nineties, enjoying life with all our faculties until our very last day. Long term care insurance policies are a way to hedge that bet. Insurance companies that offer long term care policies determine prices by the buyer's age at time of purchase, and by the buyer's health. Prices should remain level, but can jump if the insurance company petitions state regulators for an increase because of rising future claims that exceed their original expectations.
Here are some basic choices you'll have to consider:
Information & Useful Definitions
What is Long Term Care Insurance (LTC)?
The policy helps cover the cost of Long Term Care, picking up where health and disability insurances leaves off. LTC refers to assistance with daily activities such as eating, bathing or dressing over an extended period of time, these are classified as Custodial activities. It also includes assistance for those suffering from a severe cognitive impairment such as Alzheimer's disease. LTC is generally provided in the patient's home, an assisted living facility, or a nursing home and is Custodial Care, not Medical Care.
Why would I buy Long Term Care Insurance?
At some point in your life, there is a strong probability that you will need LTC for yourself or your spouse. The longer you wait in life to purchase a policy, the more expensive it will become. The national average cost for a semi-private room in a nursing home is now $70,000 annually, it does vary by state.
Won't Medicare and Medicaid cover my LTC expenses?
No, don't expect much help from either source. Medicare does pay for skilled care for a limited period and generally does not pay for custodial care. Medicaid covers some LTC, but not until you and your spouse "spend down" all of your assets then you can "qualify" to receive it. The bottom line is if you want access to the highest quality care and don't want to trade your wealth you've accumulated over your life time for your care, LTC insurance is a valuable thing to have.
What is a Benefit Period?
This is the length of time coverage is available through your policy available in a number of years usually two (2), three (3), five (5) or even a lifetime. At a minimum, three (3) years is recommended. This is the maximum amount of time that benefits will be paid unless the total dollar amount was paid prior to the term length.
What is the Benefit Amount or Daily Benefit?
Policies usually pay benefits by the day, week, or month. In North Carolina, the average cost of a daily nursing home stay is between $150 to $170 dollars or at a minimum $4,500 per month. This should be a "targeted amount" for your stated benefit within your policy.
What is an Elimination Period?
A policy elimination period is the amount of time that needs to pass, after an individual begins receiving services before the policy begins to pay. Think of it as a deductible, the amount you will be required to pay before the policy starts covering your expenses. The most common elimination periods are 60 or 90 days. Medicare will cover some of your Medical Costs during this period, but not Custodial Costs, so all the costs of your care may not be yours to bear. This item directly effects the monthly premium.
What is Inflation Protection?
This optional coverage is designed to increase the policy's benefit amount on an annual basis to assist with the ever increasing rate of the costs of care. This option may or may not keep up with the actual costs increases over the life of the policy, but it does assist with the inevitable rise of the cost. It is critical to understand the differences in the options you have within the important item. Your options are "simple inflation", "compound inflation" and a "guaranteed purchase option", or GPO. The first two options initially, do increase the monthly premium, but are well worth the investment and are highly recommended. Once the premiums are established, they do not increase every year, unless the company increases all the policies within the entire class. You will not be singled out for a rate increase.
* Simple Inflation: The benefit amount is increased on an annual basis by a set percentage usually three (3) or five (5) percent. This percentage is stated within your policy and your premium remains constant as your benefit increases.
* Compound Inflation: The benefit amount is increased and is higher than if the simple inflation method is used. This option is usually more expensive than the simple inflation, but does increase the Daily Benefit dramatically over time.
* GPO or Guaranteed Purchase Option: This option does not increase the premium. Through-out the life of the policy, usually every three (3) years, you will be allowed to increase your benefit amount to keep up with inflation. When you exercise this option, your policy premium will be increased for two reasons; your current age and the amount of the benefit. Normally, by the second or third time this option is utilized, your premium cost will be higher than if you chose the simple inflation or compound option when the policy was purchased. It is highly recommended that you select either simple or compound inflation protection.
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For more information or to receive a quote comparison, complete our "Contact Us" form or feel free to call us right away!
704-748-4885
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