What Is Long-Term Care Insurance and Who Needs It?

Planning for the future is tough when it comes to your own mortality. None of us wants to think about our final years, but if you’re nearing retirement age, you’re well aware that long-range financial plans can help you afford a better life.

It may be hard to imagine now, but someday you may be incapable of living on your own. Many elderly people develop chronic medical conditions that require assistance with routine daily activities. Buying a long-term care insurance policy is one way to prepare for this and protect your nest egg from being absorbed by the cost of full-time care.

At Benafica, we’re here to help you navigate the insurance world and choose the right coverage for your needs. Let’s take a closer look at long-term care insurance, who qualifies, and who should consider buying a policy.

What Is Long-Term Care Insurance?

As people get older or become chronically ill, they sometimes need help accomplishing daily tasks like getting dressed, bathing, preparing and eating meals, and more. Assisted living centers, nursing homes, and in-home nurses provide this type of long-term care, but it can be very expensive, and most regular health and disability insurance policies don’t cover it.

Long-term care insurance policies sold today are comprehensive, providing coverage for care and services such as:

  • Home care, nursing care, rehabilitation therapy, and personal care
  • Homemaker services, such as housekeeping
  • Adult day care centers
  • Hospice and respite care
  • Assisted living facilities
  • Alzheimer’s special care facilities

Once you’re eligible for long-term care benefits, most insurance plans will pay a specified amount per day to cover disability costs.

Not all long-term care policies are the same, so it’s important to talk to an insurance expert to find the best coverage plan for your needs.

Who Qualifies for Long-Term Care Insurance?

While there are no age restrictions on long-term care insurance, most insurance companies recommend you purchase a policy as early as 40 years old and no later than the age of 60.

You don’t want to buy the insurance too long before you need it, but you also don’t want to wait too long, because applicants for long-term care insurance must be in good health. You won’t qualify for long-term care insurance if you already have a debilitating condition.

3 Reasons to Buy Long-Term Care Insurance

Long-term care insurance can help give you peace of mind that no matter what happens to you later in life, you’ll be well taken care of. You should consider buying it because:

  1. Long-term care insurance helps protect personal assets and family inheritance. Round-the-clock care can be costly – but also necessary – for those who need it. Just a few years of full-time care could quickly deplete a family’s savings, leaving little or nothing behind for future generations. 
  1. Long-term care can prevent you from ending up on Medicaid. Medicaid benefits are not extensive enough to cover many costs that affect an elderly or disabled person’s quality of life. It covers only short nursing home stays or limited home healthcare when you require nursing or rehab, and does not pay for custodial care (supervision and help with day-to-day tasks).

Plus, Medicaid benefits have been cut periodically. This leads to cutbacks at nursing homes, causing some providers to refuse to accept Medicaid.

  1. Long-term care insurance gives you more choices for care. The more money you pay for your policy, the better quality of long-term care you can get.

That said, buying long-term care insurance might not be affordable for you if you make a low income and have little savings. Experts recommend spending no more than 5% of your income on a policy.

What’s the Cost of Long-Term Care Insurance?

When you buy a long-term care insurance policy, you get to choose the amount of coverage you want. The policies typically cap the amount paid out per day, as well as the amount paid during your lifetime.

Under most long-term care policies, you’ll have to pay for long-term care services out of pocket for a certain amount of time before your insurance provider starts reimbursing you. This is known as the “elimination period,” and it may last 30, 60, or 90 days.

The rates you’ll pay for long-term care insurance depend on many factors, including your:

  • Age and health. The older you are and the more health problems you have, the more you’ll have to pay for a policy.
  • Women typically pay more for long-term care insurance than men. That’s because women generally live longer, and therefore have a greater chance of making claims.
  • Marital status. Married people pay lower premiums for long-term care insurance than single people do.
  • Insurance company. Different insurance companies charge different prices for long-term care coverage. That’s why it’s important to compare quotes from different providers!
  • As we mentioned previously, the better the coverage you desire, the more you’ll have to pay for it. For example, you’ll pay more for policies that offer higher limits on the daily and lifetime benefits, or policies with fewer restrictions on the types of care covered.

As you can see, many factors come into play when it comes to the cost of long-term care. If you’re looking for an average, MarketWatch says the average annual premium for a 55-year-old couple in 2020 is $3,050. For a 55-year-old female, the average is $2,650, and for a 55-year-old male, the average is $1,700.

While long-term care insurance is a great option for many people, it’s not a good fit for everyone. The good news is, there are alternatives! We recommend speaking with an insurance expert to decide the best course of action for your circumstances.

Get Help Choosing the Right Long-Term Care Plan for Your Needs

Benafica provides group and individual brokerage consulting and exchange services to help enable clients to mitigate costs while also improving health and well-being. If you’re considering long-term care insurance, we can help you examine the important financial considerations, make decisions about your policy, and inform you about cost-cutting strategies to reduce your premiums.

We are here to protect and empower you through insurance tools and services! To get in touch with a representative of our team, please fill out our contact form here or call 651.259.9000 . We’re open Monday through Friday from 9 a.m. to 5 p.m.