With longer average life expectancies, the cost of long-term care is a major financial risk. The term “long-term care” refers to a wide range of services including assistance at home with daily activities to care in a nursing home. The risk of long-term care can be dealt with in three ways: retain it (self-insuring if you have a high net worth), avoid it (trying to stay healthy but, unfortunately, there are no guarantees), or transfer it (i.e., paying an insurance company to handle the risk). The best time to buy a policy is generally age 55 to 60. If you wait too long, premiums increase significantly and/or you could become uninsurable through some type of medical diagnosis. Premiums are lower in your 40s or early 50s but you could be paying them for a long time before coverage is needed.
Use the worksheet below to list the cost and features of three different long-term care (LTC) insurance policies. Then compare the three providers to determine the best policy for you.
|LTC Policy Feature||LTC Policy Provider #1||LTC Policy Provider #2||LTC Policy Provider #3|
|Services covered (e.g., home care, adult day care, custodial care, etc.)|
|Amount of daily benefit|
|Length of coverage|
|Requirement for coverage (e.g., number of ADLs)|
|Additional features (e.g., premium waiver after 90 days of coverage)|
Activities of Daily Living (ADLs)- Common daily tasks (e.g., eating) that, when they are unable to be performed, can serve as a “trigger” to obtain benefits from a long-term care insurance policy.
Elimination Period- The number of days (e.g., 90 days), starting from the date of an insurable event, before benefits are paid on certain types of insurance policies (e.g., disability and long-term care).
Long-Term Care Insurance- Type of insurance that covers the cost of support services (e.g., home health care and nursing home care) when someone is unable to perform basic activities of daily living.
State Health Insurance Assistance Program (SHIP)- A state-run program that provides free information and counseling about senior health insurance issues. Information about the State Health Insurance Assistance Program (SHIP) can be found at www.state.nj.us/health/senior/ship.shtml.
Search This Site: