What to know before buying long-term care insurance

BBB Advice on Long-Term Care Insurance

By Vee Daniel, CEO/President, Better Business Bureau of the Upstate

Planning ahead for yourself or a loved one is a big job. Living in a nursing home is expensive and Medicare or Medicaid usually only covers a portion of the costs involved. To offset the costs, you may consider purchasing long-term care insurance. Here’s what to consider before taking out a policy.

Things to consider when purchasing long-term care (LTC) insurance

BBB recommends the following tips to help you choose an insurance plan with confidence.

  • Start planning early. Even if you don’t think you’ll buy a policy right away, get an idea of how much you’ll need to be insured for when you do take the leap. Look into private and semi-private care, consider what you need, and compare the costs.
  • Know when to buy LTC insurance. According to the American Association of Retired Persons (AARP), if you are still in good health, it’s best to start shopping for LTC insurance between 60 and 65 years old. Of course, the earlier you purchase a policy, the lower your premiums will be, and the better your chances of them accepting your application. For these reasons, the American Association for Long-Term Care Insurance says the best age to purchase LTC insurance is your mid-50s.
  • Invest in a shared policy. If you are married, you may be able to save a considerable amount on your premiums with a shared policy.
  • Shop around. Pricing can vary considerably from company to company. Get quotes from several companies, considering your age, health, and desired coverage levels.
  • Understand the coverage before you buy. There are several kinds of LTC insurance policies. A traditional policy will pay a predetermined amount for each service and will have either a time limit or a maximum dollar amount. If the plan covers more than one kind of long-term care, it’s most likely the policy payout will be capped at a specific dollar amount. Make sure you understand how each plan works and what is covered before you sign the dotted line.
  • Know that premiums can change over time. Before signing up for a policy, find out if your premiums will increase. Know what you can expect to pay five or ten years from now.
  • Consider alternative ways to pay for long-term care. Instead of stand-alone LTC policies, some consumers choose to invest in a hybrid life insurance policy that includes long-term care coverage. Others tap into their “living benefits” on a life insurance policy to pay for long-term care. Still others choose to simply set money aside over the years and save up for long-term care.
  • Consult a financial advisor. A trusted financial advisor can help you consider your options from an unbiased point of view. Don’t hesitate to get help if you have trouble deciding how to pay for long-term care.

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