How to Buy Long Term Care Insurance

In the past, we’ve talked about the high cost of elder care. Now, I wanted to spend a bit of time talking about long term care (LTC) insurance.

How to buy long-term care insurance

In general terms, LTC coverage applies to individuals who are not actually sick, but are not able to perform the basic “activities of daily living.” These include things like bathing, using the bathroom, dressing, eating, or transferring yourself in/out of a bed or chair.

In most cases, coverage is also available for those with a cognitive impairment. This could include:

  • memory loss (short- or long-term)
  • loss of orientation as to people (who they or others are), places, or time
  • reduced capacity for deductive or abstract reasoning

If the impairment is bad enough that it requires supervision to ensure safety, most LTC policies will kick in.

According to the Department of Health and Human Services, about 70% of those aged 65 or older will require some sort of long term care during their lifetime. Over 40% require care in a nursing home. For the most part, traditional health insurance and Medicare won’t cover the costs associated with this care.

In other words, you’re on your own. You’d be well-advised to plan ahead.

What follows is a list of important considerations when it comes to choosing a long term care policy. This list is by no means exhaustive. It’s mainly based on things that I’ve run across while reading through my parents’ policies. But it at least gives you a good place to start.

When to buy LTC insurance

First and foremost, you’ll need to decide when to buy your policy.

If you buy too soon, you may wind up paying for coverage that you don’t need yet. But if you wait too long, the premiums will be sky high. Also, the longer you wait, the more likely it is that an insurance company will reject your application.

For reference, more than half of all policies are sold to those in the 55-64 age group. While an argument could be made for buying as early as age 45, the recommended age is 50.

Benefit level

Another important consideration is how much coverage you’ll need. Obviously, more is better, but higher benefits come at increased cost.

It really seems like this one falls into the “it depends” category. The costs associated with different types of care vary widely across the country. In other words, one size doesn’t fit all.

In order to determine how much coverage you should buy, you need to consider your individual situation. Here are a few questions to ask yourself:

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