Long-Term Care Insurance: Things to Know Before Purchasing It

As baby boomers begin facing retirement age and expectations for longer life expectancy increases interest in long-term care insurance has increased. But is a long-term care insurance policy right for everyone?

Long-term care insurance Explained

Long-term care insurance is an insurance policy that covers the cost of care you might need if you suffer a disability, prolonged physical illness, chronic illness, or cognitive impairment and are unable to live independently without some form of care. Services covered in most long-term care insurance policies are nursing homes, hospice care, assisted living facilities, respite care, home care and adult day care. The services covered depend upon the type of policy you purchase. The difference between regular medical insurance and long-term care insurance is that while the medical insurance covers you while you are being treated for an illness, long-term care insurance pays for your care to keep you comfortable when there is no absolute cure.

Who Should Consider Buying Long-term care insurance?

While no one knows for sure if they will need long-term care insurance it is estimated that with longer life expectancy more people will experience at least some type of disability or chronic illness in their lifetime. When deciding if you should have long-term care insurance you should consider your age, your current health and family history of health, income, assets and your retirement plan. People with a good retirement plan and many assets generally should consider having a long-term care insurance policy. The policy will protect their assets in the event that they become ill and need long term care. However, if you have a small amount of assets and depend upon Social Security as your only retirement income then long-term care insurance may not be right for you. The premiums can be expensive and may be more than you can afford to pay for.

Another reason people purchase long-term care insurance is so they can be independent of government aid in the event they become ill. With their own insurance they can choose the type of care they want and the facilities they live in. To further explore whether or not long-term care insurance is right for you talk with an insurance agent who sells this type of policy. They have a check-list that will determine if it is within your interests to purchase a policy.

Crucial Components of a Long-term care insurance Policy

If you decide to purchase a long-term care insurance policy you should be aware of some of the options available. The type of services you are allowed and the way in which the money is distributed can vary between policies. Make sure you understand these things before signing up for a policy.

Services Covered - Review the type of services covered by your policy. Some policies allow you to choose the facilities and care you desire while others choose them for you. Make sure any policy you purchase covers the basics such as home care, hospice, respite care, assisted living facilities, etc. Ask for a detailed list of services before signing up with a policy.

Limitation of Policy - Some policies limit the type of services covered for different types of illnesses. Make sure you understand what illnesses are covered before purchasing a policy.

Maximum Coverage - Some policies place a maximum limit on your coverage per month or per year while others have a maximum lifetime limit. Others limit the total dollar amount they will pay. As a rule of thumb, the more coverage you have the more your premiums will be. Ask for details on maximum coverage before purchasing a policy.

Payment of Benefits - The majority of policies pay using the indemnity method, expense-incurred method or the disability method. Since each of these methods is very different you will want your insurance agent to describe each before you choose a policy.

Long-term care insurance can bring peace of mind to people as they age and the benefits can be well worth the premiums. Make sure you find the policy that is right for you and review all your options before you decide to purchase this type of insurance.