Whether you’re just starting to think about retirement or you’re already experiencing your golden years, if there’s one form of insurance that should be considered crucial, it is long term care insurance. While most individuals have some form of health and dental insurance either privately or through a company insurance plan, few have long term care insurance and it’s something that many individuals end up needing later on. Let’s take a look at long term care insurance and see why this form of insurance is a must-have for most portfolios.
What is Long Term Care Insurance?
Long term care insurance is a form of insurance that intended to cover the cost of assisted living, home care or nursing homes, which are typically not covered under private health insurance or Medicare. While about 60% of individuals who are making use of long term care insurance are over the age of 65, the rest are younger and are generally suffering from some form of cognitive impairment which makes daily life extremely difficult to manage.
Long term care insurance is meant to ensure that if one does end up needing some form of assisted living care, they are not left trying to pay the bill or relying on family members to have to help out. In today’s world, family members are typically separated by great distances, which means that a change like this can cause serious distress to those who need to come and help out. By purchasing long term care insurance, one is showing that they are seriously thinking about the future and covering all angles in case things don’t go as planned.
What does Long Term Care Insurance Cover?
Benefits and coverage that come with long term care insurance are dependent on variables such as the plan and the insurance provider. A good long term care insurance plan will provide full coverage for home health care, assisted living or a nursing home. Home health care involves having a care aide come to your home to provide cooked meals, house cleaning, and assistance with chores and other things that need doing around the home. Assisted living facilities are a bit different, as you have to move in with other residents and you receive care there. Finally, nursing homes are fully-managed care facilities which typically have doctors and nurses on staff that are capable of dealing with advanced health situations.
As with most types of insurance, long term care insurance plans come in a massive array of different formats, coverage levels and through hundreds of providers. Some will be offered as part of an employee insurance package, while others will need to be individually purchased. As long term care insurance is typically expensive, it’s important to be sure that you have a plan that covers you in the future.
Who is Eligible for Long Term Care Insurance?
The fine print varies between long term care insurance providers, but most consider a client eligible when they are at a point in their life when they need assistance with the activities of daily living, or have developed some form of severe cognitive impairment that requires round-the-clock assistance.
Most long term care insurance plans require that a client pays into the plan for a certain length of time before they are eligible to start claiming benefits. This period may range from a few weeks up to a year in length. Also, most long term care insurance plans include what are known as “elimination days”, which are similar to how the deductible on your auto insurance works. Long term care insurance with lower premiums will typically include more elimination days, and the policyholder will be responsible for paying for their living costs during that time.
Do I Need Long Term Care Insurance?
This can be a difficult question to answer. Those who have been diligent about saving for their retirement and have a nest egg put aside probably don’t need to worry too much about long term care insurance. Nursing home living costs range around the $80,000 to $100,000 per year range, so if you have that kind of retirement cash set aside you should be fine.
For the average person, long term care insurance is an excellent idea and can help make assisted living affordable later in life. Some long term care insurance plans will extend coverage to your assets, including your home. It’s worth checking out the various types of long term care insurance to see which plans best suit your goals and budget.
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