Long Term Care Planning Month on October, 2023: is long term care insurance a good investment for a family members caring for aging parents?
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Long-Term Care is designed to cover the expeneses of someone in a nursing home. The amount the plan will pay depends on the options selected when purchased.
If you or a family member are careing for a loved one and you feel that at some point they may require either home health care or nursing home care I feel LTC is a good idea. However, there are some things you need to consider.
1. The size of their estate. If the family member has a small estate it might not be worth the expense for LTC. LTC is a valuable tool to protect a persons assets from being spent down to provide for care. Because Medicaid requires that you spend down assets, the benefits paid form the LTC policy will protect those assets.
2. Amount of divertable income. When a person enters a nursing home facility typically all avaliable income will be diverted to the nursing home to pay for expenses. LTC can be used and should be used to make up the difference. For example, if the monthly expense is $4,500.00 and you family member has $2,000.00 in income the long-term care policy should provide enough benefit to cover the remaining $2,500.00. Since most companies have a minimum daily benefit of $100 the plan would pay out $3041.00 monthly. Because the plan will pay out $3,041.00 to the nursing home, it will leave $541.00 a month of her income avaliable for her to spend.
By taking their income into account, your not over purchasing coverage.
3. Another thing to consider is the facility where you want your family member to stay. If you have a spacific place in mind, talk with the home to determine the cost. Most plans can be purchased with inflation protection that compounds the daily benefit by typically 5% each year. By knowing the cost, it can help you determine the amount of coverage needed.
4. Finally, what is their health. LTC policies are not underwritten useing mortality (likelyhood of death) like life insurance. It is underwritten useing morbidity which evaluates the liklehood of disease or disibility. If the family member is ill or have a disabling medical condition, you may not be able to quilify.
Also be cautious when applying for coverage if the agent tells you they guarantee it will be issued. Look over and read the application to be sure all medical information is disclosed. Some dishonest agents will omit medical information while completing the application to ensure it will get issued. However, if this occures the company is likely to decline the calim. To be safe, review the application.
I hope this helps
long term care insurance?
Honey, there's no "value" here. It's pointless to compound, except as an exercise to determine if you actually want to buy it or not.
The point of the inflation rider, is that you NEVER KNOW exactly what inflation is going to be. With the second plan, you're betting it won't be high. If we have a five year period with double digit inflation like we did in the 70's, you'll be screwed under the second plan.
what is the best long term care insurance?
The kind that's in force when you need to pay for long-term care.
But, seriously folks....
Long-term care insurance is not an "off-the-shelf" commodity. To get the best coverage, you need to do a lot of homework and become an informed consumer on the subject.
1) Take the time to go online and get resources for your research. A good place to start is your state department of health website. Virtually all states have a section on issues involving the elderly where you will find information about late-life health problems and paying for care.
2) Order whatever free information you find there or copy and paste it to a Word file and save it in a folder that you create for "Long-term Care".
3) After familiarizing yourself with the landscape, contact several nursing facilities and a couple of home care agencies in the location where the insured is likely to retire. Ask them about average costs and what insurance companies they like to work with...and ones that they don't.
3) Find a competent long-term care agent, preferably one that has taken advanced coursework and is experienced in long-term care PLANNING, not just insurance. Make sure that s/he is an independent agent and can represent several highly rated insurance carriers that have long-time experience in the long-term care market. Examples: John Hancock, MetLife, Genworth (formerly GE) and Prudential. Every carrier designs their coverage a little different from the other, so it's hard to compare apples-to-apples. The lowest premium is not always the best choice for your particular situation.
The rest is up to you. Make your choice of contract design and insurance company based on sound research and a clear understanding of what the insured needs.
This coverage isn't cheap. But, the annual premium may be a lot less that even one month's cost for home or facility care. Everyone over 45 should be seriously considering this type of insurance - both for themselves, or their parents.