Insurance is always a good idea in hindsight, but did you know that with long term care insurance, you can save thousands of dollars by purchasing a policy years before you think you should actually buy one? However, there are certain things that you should be looking for in every policy in order to get the best care possible without spending tons of extra money. We will go over a few of the biggest options that you will find, and some of the highlights of these will be mentioned so you have a general idea of what you will be up against.
What does it cover? Some policies are for only assisted living, some are for in-home care, some are universal. You will find that the in-home policies are cheapest, so if this interests you, pursue it early. You will also want to see if there is a daily allowance. These will stipulate a dollar amount that your coverage will not exceed per day. It might say something like, “up to $75 per day.” This is great, unless the care you actually get costs much more than this. As a rule, the higher the allowance for each day, the more expensive the policy will be.
Next, look at the length of time that the coverage is for. It will tell you that once coverage is initiated, it will last for a certain number of years. Many carriers max their policies out at five years, but salesmen will push for less because the policies become more affordable. But, is a one year policy at $50 per day something that’s worthwhile? Sure, it will offset your costs a bit, but it certainly will not meet all of your expenses. Be aware of what you are paying for and make sure that you are getting the maximum value out of anything you purchase.
There are other bells and whistles out there. Some carriers offer inflation protection. If you are younger when you buy a policy, this is a must. Today, $100 a day seems great, but 30 years from now, that same $100 will not go nearly as far. Inflation has occurred historically at about 3 percent per year since 1940, so take this into account.
Do you need insurance? The answer to this question is a coin flip, unfortunately, so it really is dependent on you and your background. 50 percent of seniors today will need long term care, but your family history will illustrate your personal need more closely. Other people are what the insurance world calls “self insured,” and can cover all of their expenses out of pocket. In this light, it can actually be considered a financial risk to pay for a policy you might never use. It is really up to you, your financial situation, and your medical prognosis for the future. If you are considering purchasing long term care insurance, make sure you meet with someone that has your best interests in mind, and not an insurance salesman. There are care planners that can help you figure this out more realistically without trying to convince you to buy something that will not help you or us not worth the investment.
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