Long-Term Care Insurance

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Some studies indicate 40% of Americans over 65 will need time in a long-term care facility and that 70% of those 65 or older will need some type of in home health care (www.bankrate.com).

With that said, it's obvious we all must decide what to do about long-term care insurance coverage. There's no denying it's a large expense, which will certainly burden many households in this economy, but can we take the chance of going without it?

If you are considering a policy, at all, following are the minimum questions you should ask your insurance broker to get the ball rolling. (Some general answers are provided and may or may not apply to the specific policy you purchase.)

1. Is long-term care insurance medical insurance? No, it is coverage to help someone get assistance with ADLs (activities of daily living).
   
   
2. Who shouldn't purchase long-term care insurance? Anyone who is living on Social Security or other supplemental insurance, Medicaid, or who thinks they will not be able to keep up the annual premiums should not consider this type of insurance.
   
   
3. What does it cover? Generally, it covers assisted living facilities, daycare for adults, nursing homes and Alzheimer's facilities, hospice care, and home care.
   
   
4. Is it true that premiums are higher the older you are when you purchase a policy? Yes, that's why so many young people today are buying it, though premiums for younger people are far from inexpensive. However, you still can purchase it when you are older, just be prepared to pay more.
   
   
5. Should my policy cover all types of care settings? Yes, ideally, because you have no way of knowing what you will need, if and when the time comes. For instance, if you purchase coverage for only a nursing home and then find you need another type of care, it will not be covered. (In any event, make sure your policy includes coverage for ADL standby assistance.)
   
   
6. Do I need to add an inflation protection rider to my policy? Depending on the age of the purchaser, yes and no. As a rule, if you are in your 50s-60s, yes. If you are 70 or older, no. Remember, too, that such a rider can add significantly to the cost of your policy, but it does give you about 5% inflation protection per year.
   
   
7. What is meant by the "benefit period" and the "daily benefit"? The benefit period is the length of time payments will be made once the coverage is started. Consider that the average nursing home stay is anywhere from two to three years; therefore, a period of less than two years is undesirable. The daily benefit is the amount of money allowed for care on a daily basis and can be as low as $50 to $250 or more, depending on location and amount of premium paid.
   
   
8. What qualifies me to go on long-term care? In some cases, the insurance company makes that decision. In other cases, it's your private doctor. This is an answer that will vary greatly from policy to policy.
   
   
9. Will my health history affect the cost of long-term care insurance? Most likely, in both cost and coverage, it will. However, it is important to be up front about any conditions you have for which they may later deny coverage, and be sure to ask how pre-existing conditions are handled.
   
   
10. Is there generally a waiting period before benefits are paid? Most policies do have a waiting period, which can range from 20 days to 120 days. They may also require proof that these days of service have been satisfied before benefits are paid.

It's important to note that there are many variables in policies between insurance companies. You should be sure to speak to an insurance expert, preferably one who is an independent broker rather than one who is bound to a particular company, before making a decision.

You may also want to familiarize yourself with care facilities and in home care options in your community to determine which ones you think would be suitable for you or a family member.

Last but not least, make sure you don't sign anything unless you fully understand what you are signing. Ask a lot of questions and have someone with you who can also listen to all the details to prevent misunderstandings from occurring.

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