Long term care life insurance is one of those insurance types that people arenâ€™t quite sure if they need. Even the people who advocate for long term care life insurance often donâ€™t know when someone should actually start investing in this type of insurance.
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Long term care life insurance is insurance that pays for care that your other types of care that your health insurance wonâ€™t pay for. Medicaid, for example, isnâ€™t designed to cover long term care, only short term care. Not having the right insurance in place can be a financial burden on yourself and possibly your family.
Controversy and Options of Long Term Care Insurance
Part of the controversy surrounding long term care life insurance is that there are no guarantees in terms of payouts. You can purchase this insurance at any age that you want, however, if you donâ€™t require long term care insurance during your lifetime, then the insurance company simply keeps all of your premiums.
Understanding your options is an excellent way for you to make a decision about whether you need long term care insurance. A long term care life insurance comparison will bring understanding and may eventually lead to a purchase if you determine that this is the right choice for you.
The first step is doing a long term care life insurance comparison of the different types of long term care insurance that you can purchase. Overall, you will find that long term care insurance is easy to understand when it is explained correctly.
Long Term Care Life Insurance: Comparison of Types
Basically, there are only two types of long term care insurance policies that you can purchase, comprehensive and facility only. Of these two policies, facility only care is the least expensive.
- Comprehensive long term care insurance is insurance that covers pretty much any long term care. This could include care in a nursing home, home assistance, long term care communities, hospice and more.
- Facility only long term care insurance is just what it sounds like, insurance that covers care in specified facilities. Typically, this involves a nursing home or other long term care facility. If a long term care community is not included, then that will be specified in your policy.
As you can see, understanding these two different coverage types is fairly simple. Now, however, you have to determine just how much coverage you need, how long you want it to last and what you want to add on to your coverage for extra protection.
Long Term Care Life Insurance: Comparison of Levels
When you are selecting a long term care plan, you need to do a long term care life insurance comparison of the different levels of insurance that you need. Level here refers to the benefit that you would like to receive once you are receiving long term care.
The first thing you need to determine is what you want your daily benefit to be. Your daily benefit will need to be enough to cover all of your daily care. Typically, the max benefit is $500 a day, but this could vary between insurance companies.
If you choose a low benefit amount, for example $75 a day, then you can expect to pay for a certain amount of your care out of pocket. While this avenue will certainly lower your premium costs, consider how much care you will be able to pay for out of pocket if you arenâ€™t working and bringing in income.
According to a study conducted by MetLife this year, the average daily cost of long term care is $229 for a nursing home and $108 for in home care. The cost of care increases each year, which is something else you have to keep in mind.
Once you have determined your daily benefit, you need to determine how long you want your benefits to last. Here are some of your choices:
- Choose an actual number, such as 5 years, or choosing a lifetime benefit. As you can imagine, choosing a lifetime benefit is much more expensive than a 5 year benefit.
- Go with an unlimited benefit, an annual max benefit or a lifetime benefit amount. If you need to keep your costs low, then choosing a smaller benefit amount will reduce the cost of your premiums.
- You can save money on a comprehensive policy if you choose to exclude specific types of care. Pretty much any part of a policy is negotiable, both to add things and remove things, making it easy to cater to your specific needs.
Long Term Care Life Insurance: Comparison of Cost
You will also need to decide whether you want to include any riders onto your policy. Riders will increase the cost of your long term care insurance premiums, but many people find what can be added on to be important. One important consideration is whether or not to include inflation protection.
Inflation protection means that instead of your rates increasing over time, your insurance company estimates the projected cost of inflation and then averages that out into a specific number of payments. Instead of paying $100 a month, for example, for 10 years and then seeing your premiums increase each year after, you would pay a flat rate of $200 a month but your premiums would never change.
Other factors that may increase the cost of your long term care insurance is the amount of care you receive. You can simply include staff to care for you or include all of the necessary equipment, upgrades to your home to make it easy for you to get around and even training for your family members so that they can provide care for you as well.
The more options you have for your care, the more expensive that it is going to be. As such, you need to ensure that you shop around for your long term care insurance and compare prices between several companies.
There is some debate about whether everyone should buy long term care insurance, but there is no debate about the high costs of paying for that care on your own. You need to determine for yourself whether the risk of having something happens outweighs the cost of paying for something that you never get to collect on.
Comparing rates ensures that, at the very least, you donâ€™t spend too much on your long term care insurance. The savings you find may make long term care insurance budget friendly for you, negating some of the concern that you may have about whether the insurance will every pay for itself.
If you do find yourself in the situation where you need long term care, you should know that most insurance companies wonâ€™t charge you any premiums while you are receiving care, whether it is for a few weeks or itâ€™s for the rest of your life. This will ease the burden from you and your family.
Start comparing rates right now and find out how much long term care insurance will cost you. You donâ€™t have to buy anything, but this is an excellent way for you to start planning for your future.
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