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Why Long Term Care Insurance

What is long term care insurance?

Long term care insurance is an insurance product that helps pay for services prescribed if you are no longer able to perform 2 of 6 activities of daily living due to injury, chronic illness, disability, the aging process, or severe cognitive impairment (such as Alzheimer’s disease).

Who needs long term care insurance?

At least 60% of people over age 65 will require some long term care services at some point in their lives 1, which may cost $60,000 per year or more depending on location.2 Neither Medicare nor Medicare supplement policies cover extended custodial nursing care. State Medicaid programs do cover nursing care for the indigent, but that means that all assets and income must be spent down before the state picks up the tab and you do not get to choose the facility in which you will receive care. Additionally, the Deficit Reduction Act of 2005 has closed the loopholes to prevent the transferring of assets to others in order to qualify for Medicaid.

What are the benefits of long term care insurance?

  • Protects your assets by paying for long term care in order for you to maintain your current standard of living.
  • Allows choice of facility where you want to receive long term care.
  • You will not burden your family with caring for you. They are not thrust into the role of caregiver, having to possibly sacrifice their own job or career.
  • It gives your children permission to hire someone to help with your care without feeling guilt.
  • Guarantees quality care and services.
  • Conserves your estate for a surviving spouse.
  • Avoid having to rely on Medicaid (public assistance.)

When do I need to purchase long term care insurance?

  • It can be purchased at any time as long as you are able to pass medical underwriting. It is important to apply when in good health because most plans list certain medical conditions that will prevent some people from being approved for coverage.
  • Since the cost for this insurance is generally based on age at the time of application, premiums will be lower the younger you are when you apply.
  • You'll need to weigh the availability of your resources and your own personal financial needs to help you decide when it's best to apply for long term care insurance. A financial planning professional can help assess your situation and guide you with helpful information in the decision making process.

1 U.S. Dept. of Health and Human Services, Admin. on Aging.
2 2006 Cost of Care Survey, Genworth Financial.