Long Term Care Insurance: Don’t Wait Too Long
When it comes to long term care planning, all can agree that it would be best to have some kind of plan for your parents’ or your own care than to have to scramble at the last minute and spend your entire savings.
A 2005 study led by Peter Kemper projected that people turning age 65 at that time would need long-term care for three years on average, and that more than 1 in 20 would spend $100,000 or more of their own money on long-term care.
More families are turning to long-term care insurance policies to cover the gaps.
You should keep a few things in mind when shopping for long-term care insurance:
Don’t buy too much. The benefit on a long-term care insurance policy is generally structured as a fixed daily amount over a certain period up to a cap. You can typically start the clock on the benefit and begin to access the dollars when you have a “long-term care event,” such as breaking a hip or having a stroke, in which doctors expect you to need help with the tasks of daily living for at least 90 days.
You can get a much more affordable policy by structuring a benefit package that also includes time with a home health aide, at $21 an hour nationally by the same survey, or adult day care. In some cases, just 10 to 15 hours of respite care a week can be enough to allow people to remain in their homes.
Don’t wait too long. You’ll save significantly — not just now but likely over the life of the policy — if you buy a policy when you’re under 60 and healthy.
Consider the “restoration of benefits” rider and the other fine print. A good policy should cover several types of care, from adult day care to nursing home care. You should understand exactly what standards you have to meet to trigger the benefits, and it shouldn’t exclude any pre-existing conditions you have. One additional rider is called “restoration of benefits.” Let’s say you fall down the stairs at 72. You can start spending the benefits today for a home health aide. But once you recover, the “restoration of benefits” rider allows you to stop that clock. If you stay well for six months, the pool of dollars is restored as if nothing ever happened.