Planning for the Future: Long Term Care Insurance Explained
Traditional health insurance, along with Medicare, does not cover the custodial care often needed with chronic medical conditions. That’s where long term care insurance comes in. Long term care insurance covers costs of non-medical care that offers assistance with daily or personal activities.
What is Long Term Care Insurance?
Long term care insurance covers expenses related to home care services, nursing homes, and assisted living facilities. Custodial care assists individuals with Activities of Daily Living. Activities of Daily Living include:
Bathing
Eating
Dressing
Toileting
Transferring - the ability to walk, and get in and out of bed
Continence - controlling one’s bladder and bowel functions
To activate the benefits of long term care insurance, the beneficiary must be unable to perform at least two of these Activities of Daily Living. While no one wants to consider needing help with these daily tasks, it is important to recognize the growing need for this coverage.
The Growing Need for Coverage
As you age, healthcare costs in the US are escalating and the population, at large, is aging. These two factors heighten the importance of carefully personalizing coverage solutions.
Aging Population
The Population Reference Bureau estimates that the percentage of Americans ages 65 and older will rise from 17% in 2020 to 23% by 2050, from 58 million to 82 million. As the population ages, the demand for long term care services will be amplified.
Escalating Healthcare Costs
The United States Health and Human Services found that, “on average, an American turning 65 today will incur $120,900” in long term services and supports, in today’s dollars. The price of healthcare services has steadily increased over the years and will continue. The U.S. Centers for Medicare & Medicaid projects healthcare spending to reach $16 trillion by 2030.
Both the increase of healthcare costs and the aging population magnifies the need for thorough insurance coverage planning and financial planning. The U.S. Administration for Community Living and Administration on Aging found that 70% of 65 year-olds today require some kind of long term care. And 20% of those are estimated to need it for more than 5 years.
Alternate Long-Term Care Financing Options
In addition to traditional long-term care insurance, consider alternative options like annuities and life insurance with long-term care providers. Annuities provide a steady income stream that can cover long-term care expenses during retirement. Alternatively, life insurance policies with long-term care providers offer both death benefits and coverage for long-term care costs.
When choosing between these options, consider factors like age, health, and financial goals, and seek guidance from a trusted insurance professional or financial advisor to make an informed decision that best suits your needs and preferences.
Effective Planning Strategies
While there is not a perfect formula to guarantee the faultless financial plan, below are a few vital components to consider when personalizing your coverage solutions.
When to Buy Long Term Care Insurance
Although a qualifying adult can buy long term care insurance at any age, experts generally suggest buying it between age 60 and 65 for the most cost effective policy. The younger you buy long term care insurance, the longer you will be paying premiums. The older you buy long term care insurance the less likely you are to qualify for the insurance. Carefully consider your personal health and financial situation, and contact experts to help you make an informed choice of when to buy long term care insurance.
Long Term Insurance Care Policy Types
As with many other types of insurance, there are a few types of long term care insurance policies:
Standalone Policies: Also known as traditional policies, standalone policies follow the simple annual premium model, which is a set amount of services.
Hybrid Policies: Although they are more complex, hybrid policies combine long term benefits with annuity or life insurance, and have lately become more popular.
Life is not one size fits all. Neither is long term care insurance. When effectively planning for costs in your senior years, carefully take into consideration all your options from all angles.
Your Personalized Coverage Solutions
Because it is statistically likely for you to need long term care after 65 years old (70% of 65 year-olds), Informed Choices highly recommends a plan for financing future long term care expenses.
When you’ve planned for long term care financing, you can secure a future of dependable and comfortable care, along with financial stability. Contact our experts or book an appointment today to walk through your options so you can make an informed choice.
