Long Term Care

Though it can be a touchy subject, Long Term Care Insurance is one of the greatest precautions you can take to protect your investments and your family from the expenses of an unforeseen tragedy or simply from limitations caused by aging.

Overview

What is long term care?

Long term care refers to the many services beyond medical care and skilled nursing care used by people who have disabilities or chronic (long lasting) illnesses. More importantly, long term care also includes those services needed by people who are simply unable to perform certain nonmedical activities of daily living due to age or infirmity such as walking, bathing, dressing, eating or using the bathroom. Long term care insurance helps you pay for these services, which can be very expensive. A long term care insurance policy ensures that you can make your own choices about what long term care services you receive and where you receive them.

Care may be required due to physical impairment or cognitive impairment. The effects of Alzheimer’s, strokes, diabetes, auto accidents, sporting accidents and dementia commonly trigger the need for long term care services.

Long term care can be received at home, in an assisted living facility or a skilled nursing facility. It also includes things such as community programs such as adult day care.

Who needs long term care?

As we age, it becomes more likely we will need long term care services. The U.S. Department of Health and Human Services reports that 70% of people turning age 65 can expect to use some form of long term care during their lives. The risk is also significant for working age adults as 42% of the 13 million people receiving long term care services are between the ages of 18 and 64.

How long will you need care?

By gender, women need care for 3.7 years while men average 2.2 years of long term care. Consider that one-third of today’s 65 year olds may never need long term care services, but 20 percent will need it for longer than 5 years.

When Should I Get Long Term Care Insurance?

Consider a 45-year old man who purchases a long term care policy rather than waiting to age 65. He could purchase a $4,500 monthly benefit plan with a 3% compound inflation rider that increases the monthly benefit over time. The annual premium for this plan at age 45 would be $1,248. If, instead, he waited until age 55 to purchase his plan, he would have to buy a $6,000 monthly benefit because the cost of care will have increased over those ten years with inflation. His annual premium for age 55 would be $2,044. If he waited until age 65, he would have to purchase an $8,000 monthly benefit again because the cost of care will have increased over those ten years with inflation. His annual premium for age 65 would be $3,941. In these three scenarios, the cost of coverage to age 80 would be $43,680, $51,000 and $59,115 respectively. The 45-year old will pay the least over time and the 65 year old will pay the most. Another consideration is that the younger you are, the more likely you will qualify for a plan considering medical underwriting, including the best rate available based on very good health. Conversely, the older you are, the less likely you will qualify for a plan considering medical underwriting or you might get an increased rate based on average or poor health. The bottom line is that getting a plan in place sooner is better.