Questions to Ask before Buying Long Term Care Insurance

If you want to effectively plan investments and savings, it’s crucial to understand the importance of long term care (LTC) insurance and how it helps deflect healthcare costs. You also need to know which type of policy is right for you, and consulting a professional financial advisor can point you in the right direction

The following questions will help you choose a long term care policy:

Will you need long-term care?

With stressful and unhealthy lifestyles today, it’s highly likely that a great majority of individuals will require assisted living or nursing care in the future. LTC insurance is ideal for those who believe they will need assistance with at least 2-5 daily activities as they near the age of 65.

Will the government pay?

Government coverage for long term care or assisted living is still unclear. Limited nursing assistance may be provisioned for in certain cases where the individual has been hospitalized, but long-term services for chronic ailments are not covered by Medicare except for those with extremely limited financial assets (below $2000).

What’s your net worth?

Net worth plays an important role in deciding whether to purchase health insurance at all. Depending on where one stands financially, choosing between various options becomes easier. Individuals can decide whether they would like to invest in LTC plans, which can be passed on to dependents if not utilized.

When should you buy?

When it comes to purchasing LTC insurance, it’s best to start investing as early as possible. The risk of ill health grows with age, and rising premiums will be necessary for attaining coverage the longer you wait. Ideally, start investing in LTC insurance latest by your mid-50s.

How much coverage should you buy?

The amount of coverage required solely depends on the kind of policy chosen, since each plan varies as per benefits and payout per day. Deciding on the coverage means understanding what facilities are going to be required, and then choosing a policy which will support the expenses that will be incurred.

Should you buy inflation protection?

The answer to this question will always be yes, because individuals will most likely claim their benefits after 25 years if they start investing in a policy in their mid-50s. With that time lapse, the value is bound to come down. An annual inflation rider of 4% is likely to give good long-term returns.

Is a group policy a better deal?

A group policy may or may not be the best option for someone looking to invest in LTC insurance, since group policies have higher premiums as compared to individual ones. Typically, group long term care policies require only limited underwriting, and hence carry more risk for insurers.

Do combo products make sense?

High net worth individuals should consider combo products offered by LTC insurance companies for the added-on annuity or life insurance component. This provides flexibility and proves to be beneficial for the surviving spouse (if the funds are not utilized for their main purpose), but at a heavy cost.

What if your insurer folds?

There is always the risk that the insurance company could falter or go bankrupt, leaving you adrift. If the company goes out of business, there is a chance that the policy could be transferred to another company for continued coverage. The state also has provisions for these situations.

Should you buy?

Buying LTC insurance offers peace of mind, assuring financial security against extended healthcare costs. It’s a good bet for individuals with decent savings and earnings, but the purchase of long term care plans should only be made after close consideration of financial priorities and consulting with an experienced advisor