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Long-term care insurance pays for care that is typically not covered by private health insurance or Medicare. It can help protect your assets later in life.  

Things to consider when purchasing long-term care insurance

When do long-term care insurance benefits start?

Long-term care policies include what is called an elimination period. This is like a waiting period before your coverage begins.  You'll be responsible for paying any care costs until the elimination period ends.  Elimination periods can range from zero to 180 days with shorter elimination periods costing more than longer ones. 

What are requirements for coverage?

Long-term care policies include something called benefit triggers.  This basically means you're not covered unless you satisfy certain requirements such as inability to dress, bath, or eat without assistance. 

How much does long-term care insurance cover?

Long-term care polices provides a daily benefit which is the maximum daily amount your insurance policy will pay in any single day for your care. The daily benefit may include room and board, home care, adult day care, hospice, respite care, etc. It can vary based on the dollar amount you select when you buy your policy and the type of care you end up receiving.

What is the benefit period? 

You can choose a benefit period that is a specific number of days, months or years. A maximum benefit period may range from one year to the remainder of your lifetime. Be sure to ask your agent or broker if the benefit amounts will increase with inflation and if that increases your premium.

What things should I consider when purchasing long-term care insurance?

  • Cost:  The younger you are when you buy long-term care insurance, the less it costs.  How much are the premiums and can they change over time under any circumstance?  

  • Daily Benefit:  What is the maximum daily benefit that you will be paid?. You usually can select a daily benefit of between $50 and $250 per day.

  • Benefit Period:  How long can you receive payments from the insurance company once you need care. You usually can select a specific number of years (2,3,4,5), or lifetime plans are also available. The average length of stay in a nursing home is 2 1/2 to 3 years. Note: A three year plan will be less expensive than a lifetime plan.

  • Elimination Period:  How long will you be responsible for paying for your care before the insurance begins to pay? This works like most insurance deductibles except it is stated in a number of days instead of dollars. Most plans have a variety of options like 0 days, 30 days, 60 days, or 100 days. Be sure to check if this deductible is once in a lifetime or if it can repeat.

  • Inflation Adjustment:  Does your benefit grow with inflation? How and when is the inflation adjustment computed?  This is usually an option but can be expensive.  

  • Home Care or Licensed Facility:  Does the policy cover expenses for home care or are your required to be in a licensed facility?
  • Stability of Company:  Research the stability of the company you are thinking about buying from, and be aware that all plans must comply with state consumer protection laws.  What is the company's history of premium increases for long-term care policies?
  • Nonforfeiture:  If you’re worried about being able to afford the premium in the future, ask your agent about a nonforfeiture value before you buy a policy. This option prevents you from losing everything if you cancel your policy or if you don’t pay the premium when it’s due. This benefit costs extra, but provides reduced coverage should you fail to pay the premium.
You may choose to buy a long-term care policy to protect your assets. On the other hand, a long-term care policy is not a good choice if you have few assets or limited income.