What you need to Check for in a Long Term Care Insurance
A close family friend recently phoned me to ask, ” So I am thinking about long term care insurance, what do I really need to look for and where do I start? ” To which my response was, ” Are you confused?” ” Yes. ” Well, that;s how most people start. We both laughed, but the point remains that getting a long-term care insurance plan can be very confusing.
I have covered the benefits of getting a policy in the past postings that I did on the subject, especially in the early years of retirement. But what should you be looking at when you are shopping around for an LTCI policy? and how do the policies actually work?
1. Figure out what will be covered. LTCI policies vary and may cover home health care, homecare, adult day care (and health care), assisted living, skilled nursing care, hospice care or some combination of these, so you need to check and look closely and see what is being covered. Your best bet is to get a policy which covers most, if not all, of these possibilities.
2. How benefits will be paid out. A lot of the policies pay by a daily benefit. Sometimes the daily benefit is calculated using a monthly average. This is advantageous when working with homecare; nurses or aides might work sporadic hours if, for example, a family caregiver is available. Secondly, benefits can be paid on either a reimbursement or indemnity plan. So benefits are either a lump sum payment regardless of what the charge is OR (in the case of reimbursement) the insurance carrier will only pay for the actual payments for care even if the charge is lower than the maximum daily. Sometimes the unused funds are carried over.
3. When your coverage will begin. Many policies spell out how many activities of daily living (like dressing or bathing) you must need help with before your coverage begins. There is also a waiting period, which usually runs from 0-90 days, but sometimes is longer. So you need to consider what you can afford to cover before your benefits kick in.
4. How long does the benefits last?. How long do your benefits need to last; a few years? 10 years? Eventhough this is random, you need to take into account if you are having an illness and what kind of funds you have at your disposal.
5. What will your benefits be worth once they are paid out to you. Not only should you look at how they are paid out but what is exactly paid out in regard to inflation. Many policies offer some sort of inflation protection. Considering long-term health care costs only seem to be rising, this protection translates into having a financial cushion protecting your assets.
6. Which of the resources can help you make the best decision?. There are three resources you need to use to make the best decision: the reliable agent, the companie’s ratings and you, yourself. Make certain you choose a company who has been in business and is highly rated by A.M. Best, Moody;s, Standard & Poor;s, or Weiss. Looking for professional assistance with long-term care insurance and which policy meets your needs? Get a free long-term care insurance consultation and quote. Looking for an agent can be tricky. Many people are “referred” by carriers or internet searches. This is akin to mushroom-picking by memory;it is not in your best interest. Try looking for an agent that is good with LTCI yet sells a variety of products.
Also, if the agent’s commission rates are standardized, then it is not financially gainful for him or her to up-sell you. And although most of these decisions can and should be aided by professionals, remember that it is your job to be vigilant. Use common sense along with the help of professionals. It can be extremely hard to determine what your long term care needs are. A good place to start is by looking at what many consider the baseline;that is, what the federal government offers to its employees via the Federal Long-Term Care Insurance Program.
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