You should buy long term care insurance to protect your assets and health in the case of a disabling accident or illness that prevents you from attending to daily tasks of self care, like bathing and food preparation. Long term care insurance is becoming increasingly popular for people from age 30 and up.
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Long term care insurance provides a benefit when a policyholder needs specific care in a nursing home or assisted living facility, or their own residence. Depending on the plan chosen, it may also pay out if the policyholder requires home care for functions of everyday living, such as eating, bathing, dressing or using the washroom.
Help if Disabled
Many people think about buying life insurance coverage to replace their income if they lose their life. The benefit can be used to pay off debt, for everyday expenses or for a college fund for minor children. Fewer individuals think about how they would manage if they were disabled due to an accident or illness and how they would afford the cost of care.
Previous generations had the support of extended family and friends who lived nearby if they required assistance. For many people, this is no longer an option, since family members may be spread out around the country or even internationally. Even a car accident car render you unable to care for yourself for a short or long period of time.
Even if a person has family members living close by, they may not be available to provide care on a daily basis. This task then falls to professional caregivers. The benefit payable under a long term care plan can help to defray the cost of getting professional care, while preserving the policyholder’s other assets.
Preserve Assets for Other Purposes
Becoming disabled and having to be cared for by others is an all-too-common occurrence. Without a means to pay for care, a person will need to use savings or other assets to cover this cost. Taking out a loan against home equity is another way to raise funds for this purpose, but doing so means that the asset cannot be used for other purposes. Some people even resort to tapping into 401k plans, IRAs or Health Savings Accounts. Before you withdraw funds from such accounts read this article on using 401k, IRA and HSA funds to buy long term care insurance.
Rather than risk having to pay the penalties associated with tapping into retirement plans early, a better choice is to buy a long term care insurance policy. The best time to do so is when the policyholder is relatively young and healthy. As a person gets older, premium rates go up. Part of the underwriting process for this type of coverage is to calculate the likelihood that the policyholder will need long term care and how soon. Older applicants are more likely to need long term care and pay more in premiums.
Disorders like Alzheimer’s Disease, dementia and severe osteoporosis can affect a person to the extent that they require professional care. A patient who is in good health otherwise may live for a number of years in spite of the fact they need help with basic living functions.
Medicaid is Not the Answer
Another misconception people have about long term care coverage is that Medicaid will provide funding if a person needs to be admitted to a facility. Although Medicaid does health benefits, they are for people who are very ill and who have few assets.
In order to quality for Medicaid benefits, a person will need to exhaust all of their own assets first. Even if a person is accepted for Medicaid benefits, he or she may be limited to the facilities that accept this type of payment.
Medicaid benefits pay out at a lower rate than what a long term care insurance policy does, and the care facilities that accept Medicaid payments likely will not offer the same level of care or be located in the better areas. It’s not enough to think about where the money for long term care will come from; it’s also important to consider what level of care the available funds will provide.
Rather than adding more stress to the situation when faced with an illness or injury, a better choice is to plan in advance. Long term care insurance will pay a regular benefit for the time specified in the policy. Some policyholders will choose to receive benefits for either a two or four year period.
Other long term care insurance policies will pay out a benefit for the rest of the policyholder’s life, and this is the most expensive option to fund. There is a waiting period for coverage to begin, and premium costs will be lower if the policyholder chooses one that is more than 30 days.
Buying long term care insurance is an important part of an overall financial plan. The coverage is available if needed, and it helps to protect other assets available to the policyholder. To find the best insurance policy, a consumer should get quotes for coverage from a number of providers to compare rates and coverage terms.
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