Understanding insurance can sometimes feel like you’re trying to decode a foreign language. But don’t worry! I’m here to help break down one type of insurance that’s important as we or our loved ones age – long term care insurance.
Starting with the basics, long term care insurance is designed to help cover the cost of services that assist with activities of daily living. These activities can include things like bathing, dressing, eating, or even moving around. The need for assistance with these activities could be due to aging, an illness, an accident, or a chronic condition.
It’s important to remember that long term care isn’t just provided in nursing homes. It can also be provided in your own home, in community centers, or assisted living facilities. In fact, a lot of folks prefer to receive care at home or in more home-like settings whenever possible.
Now, let’s get into how the insurance part works. When you purchase a long-term care insurance policy, you’ll pay a premium to the insurance company. This is usually a monthly or annual fee, just like with other types of insurance.
In return, if you need long term care services, the insurance company will pay a set amount towards your care. The amount they’ll pay and the types of services they’ll cover are outlined in your policy. Make sure you understand these details when you buy your policy!
One thing to note is that there is often an “elimination period,” or waiting period, before the insurance company starts to pay for your care. This could be anywhere from a few days to several months, depending on your policy. Think of it as a deductible, but instead of a dollar amount, it’s a period of time.
Also, just like most things in life, long term care insurance comes with limits. There might be a limit on how much the policy will pay per day, or there might be a total limit that the policy will pay over your lifetime. If the cost of your care goes over these limits, you’ll be responsible for paying the difference.
Here are a few tips about finding the right type of policy for your needs.
Finding the right long-term care insurance policy is a very personal process that depends on many factors, such as your health, age, financial situation, and personal preferences.
Begin by evaluating your potential need for long-term care. Consider your current health status and family history. Do chronic or debilitating health conditions run in your family? What is your current lifestyle like? Are you physically active or do you have any habits that could affect your future health, like smoking or excessive drinking?
Next, consider your financial situation. The cost of long-term care insurance can be quite high, especially if you wait until you’re older to purchase a policy. Can you afford the premiums now, and will you be able to afford them in the future if they increase? Also, consider the other resources you might have to pay for long-term care, such as savings, investments, or family support. You may want to consult with a financial advisor to help you evaluate your situation.
Then, think about what kind of care you might want. Would you prefer to receive care at home for as long as possible, or are you open to receiving care in a facility, such as a nursing home or assisted living facility? The type of care you prefer can affect the kind of policy you should look for.
When comparing policies, pay close attention to the policy’s benefit triggers, which are the conditions that must be met for you to receive benefits. Most policies use a certain number of activities of daily living (ADLs) as a benefit trigger. The six ADLs are eating, bathing, getting dressed, toileting, transferring, and continence. Typically, if you need help with at least two ADLs, you qualify for benefits.
Finally, don’t rush your decision. Take your time to understand all the details of the policies you’re considering. And don’t be afraid to ask for help. A good insurance agent or broker who specializes in long-term care insurance can be a valuable resource in finding the right policy for you.
Brad Pistole, a native Missourian, is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management. Syndicated Columnists is the sole provider of this material, both written and conceptual, for this column. All rights reserved.
Trinity Insurance & Financial Services Inc. 5511 N. Farmer Branch Rd., Suite 101, Ozark, MO 65721. 417-581-9222 Brad Pistole (retirevillage.com)
