Do you have questions about how to compare long term care insurance policies? The number of long-term care options available online can overwhelm some family members who are looking for long-term care solutions.
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Long-term care is a very sensitive subject. The very idea of caring for an aging relative is disheartening, let alone when grown children realize that they cannot do it alone.
Understanding Long-Term Care
If you are approaching your retirement years, you might be worried about putting stress on your grown children or spouse, should you ever become incapacitated. Balancing a full time nurse’s job with a nine to five position in the office can be too stressful for even the most strong-willed individuals. Sometimes the only option is long-term care insurance. This may well be an insurance policy that you wish to seek out on your own.
Before deciding which long-term care insurance policy is right for you, it’s important to understand what such a policy covers and what benefits it provides to disabled patients. Generally speaking, this type of policy covers the cost of long-term care. In most cases, long-term care is not for a limited term, but lasts until the gradual deterioration and death of the insured.
Right away, it’s easy to see that you need a policy that goes beyond a predetermined period of time. The insurance policy you seek is completely independent of a regular health insurance policy, as well as any Medicare or Medicaid provisions. You want to work with an insurance company that is trustworthy and will take care of you until the very end.
When long-term care finally becomes an issue, the insured person is usually incapable of living on his or her own. In fact, the majority of the insured cannot even perform basic living activities. In fact, this inability to perform the functions of daily life is used as a qualifier for receiving benefits. Some of the basic costs included in a standard contract will include dress and grooming, bathing, food service, toileting and transferring. However, the best policies offer more coverage than just basic necessities.
Benefits Paid and Contract Types
Some contracts may specific what facility is coverable, while others will be open to a variety of facilities, including nursing homes, assisted living centers and Alzheimer’s facilities. Some contracts will also offer coverage of respite care, home care, hospice care and adult daycare. The full service that the patient receives will depend on the “benefit maximum” set by the insurance company. Remember that practically all facilities offer 24-hour surveillance, and this is costly. Other possible scenarios include a private nurse, therapist or live-in caregiver.
While there are contracts with many different provisions, there are generally two types of policies: tax qualified and non-tax qualified. The most common type is the former, and this contract has some requirements. Namely, the insured must require care for a three month period and must be unable to perform two or more daily activities on his/her own. In this type of contract, the doctor decides what plan of care is most appropriate. The benefits paid here are not taxable.
The non-tax qualified variety is differentiated by the fact that it has a “trigger” clause. The patient’s doctor can dictate when the patient is in need of full time care and the policy pays immediately. These contracts are naturally less difficult to claim than tax qualified contracts. Another major difference is that the insured enjoying the benefits may have to pay taxes. It is said in the insurance industry that as much as 60% of the insured population doesn’t know whether their long-term care policies are tax qualified or non-tax qualified.
The majority of insurance companies pay benefits by way of reimbursement. The insurance policies that do offer per-diem benefits are generally more expensive. How is the price of premiums determined? According to six different factors:
- A person’s age
- The benefit paid
- Length of the benefits
- Elimination period
- Health rating
- Inflation protection
The real question is: how pricey are these policies? Unfortunately, prices are steadily increasing. Premiums continue to rise not only for new policy owners but even for existing policy owners. The premiums are exceptionally expensive when they are purchased late in life. The risk of the insured becoming permanently disabled increases drastically, and the insurance company writes the contract in expectation of the inevitable.
Therefore, the ideal time to buy an insurance policy is when you are relatively young. However, even youth is no guarantee that you will have a cheap policy. About 40% of the population currently receiving benefits is under the age of 65. Some experts recommend age 60 as being the best time to purchase this type of coverage.
Ultimately, the price of the policy is determined by the insured individual’s health as well as special options like spousal survivorship, non-forfeiture and return of premium. If you are interested in finding a discount then ask about discounts for couples as well as multi-life discounts.
How to Compare LTC Insurance Policies
How do you begin to compare long-term care contracts?
- First, determine what benefits you need well in advance of ordering a policy. Do not forget to factor in inflation if you buy the contract years in advance of the risk increase. Look for a policy that includes the standard 5% compound option against inflation.
- Try to calculate the cost of the services you want (caregiver, nursing home, etc.) and determine how they match to determine how much LTCi you should buy. You might also want to ask the insurance company representative about what specific items are covered. Review each one, and take nothing for granted.
- Be sure to consider the duration of time, as sometimes cost differentials are made manifest over the long-term.
- Last but not least, research the long term care insurance company online and take note of any complaints or bad reviews.
You can use a web comparison site to compare prices and policies. Remember that instant quotes are not hard figures. The insurance company cannot make a formal offer until all factors of the case are considered.
In the end, finding a trustworthy insurance company and a generous policy is an act of love towards family members. Many aging parents do not want to burden their adult children or spouse with caretaking and so arrange for long-term care on their own. This type of policy can save you money and ensure that you are cared for in a quality facility (or at home with a quality giver). Why not enter your zip code right now and compare long term care insurance quotes?