What Is A Long Term Care Insurance Policy
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A long-term care insurance policy helps cover the costs of that care when you have a chronic medical condition, a disability or a disorder such as Alzheimer’s disease. Most policies will reimburse you for care given in a variety of places, such as:
- Your home.
- A nursing home.
- An assisted living facility.
- An adult day care center.
Considering long-term care costs is an important part of any long-range financial plan, especially in your 50s and beyond. Waiting until you need care to buy coverage isn't an option. You won't qualify for long-term care insurance if you already have a debilitating condition, and long-term care insurance carriers won’t approve most applicants over the age of 75. The majority of people with long-term care insurance buy it in their mid-50s to mid-60s.
Whether long-term care insurance is the right choice depends on your situation and preferences.
Why Buy Long-term Care Insurance?
Nearly 70% of 65-year-old people will need long-term care services or support, according to 2020 data from the Administration for Community Living, part of the U.S. Department of Health and Human Services. Women typically need care for an average of 3.7 years, while men require it for 2.2 years.
Regular health insurance doesn’t cover long-term care. And Medicare won't come to the rescue, either; it covers short nursing home stays or limited amounts of home health care when you require skilled nursing or rehab only. It doesn't pay for custodial care, which includes supervision and help with day-to-day tasks.
If you don’t have insurance to cover long-term care, you’ll have to pay for it yourself in most states. You can get help through Medicaid, the federal and state health insurance program for those with low incomes, but only after you’ve exhausted most of your savings.
How Popular Is Long-term Care Insurance?
The number of insurance companies selling long-term care insurance has plummeted since 2000. Slightly more than 100 insurers were selling policies in 2004, according to 2020 data from the National Association of Insurance Commissioners. About a dozen are selling policies today.
The uncertain cost of paying future claims as well as low interest rates since the 2008 recession led to the mass exodus from the market. Low interest rates hurt because insurers invest the premiums their customers pay and rely on the returns to make money.
Conclusion
To buy a long-term care insurance policy, you fill out an application and answer health questions. The insurer may ask to see medical records and interview you by phone or face to face. You choose the amount of coverage you want. The policies usually cap the amount paid out per day and the amount paid during your lifetime. Once you're approved for coverage and the policy is issued, you begin paying premiums.
