Long Term Care Insurance: Things you will need to check
One of my close family friend called me on the phone recently to ask ” So I am thinking about long term care insurance, what do I really need to look for and where do I start? ” To which my response was, ” Are you confused?” ” Yes. ” Well, that;s how most people start. We both laughed, but the point remains that choosing a long-term care insurance plan can be very confusing.
Our other postings on the subject I have covered the benefits of buying a policy especially in the early years of retirement. But what should you be looking at when you are shopping around for an LTCI policy? and how do the policies actually work?
1. Check what will be covered in the policy. LTCI policies vary and may cover home health care, homecare, adult day care (and health care), assisted living, skilled nursing care, hospice care or some combination of these, so you need to check and look closely and see what is being covered. Your best bet is to get a policy which covers most, if not all, of these possibilities.
2. How benefits will be paid out. Most policies pay by a daily benefit. Sometimes the daily benefit is calculated using a monthly average. This is advantageous when working with homecare; nurses or aides might work sporadic hours if, for example, a family caregiver is available. Secondly, benefits can be paid on either a reimbursement or indemnity plan. So benefits are either a lump sum payment regardless of what the charge is OR (in the case of reimbursement) the insurance carrier will only pay the actual charges for care even if the charge is lower than the maximum daily. Sometimes the unused funds are carried over.
3. Once your coverage begins. Many policies spell out how many activities of daily living (like dressing or bathing) you must need help with before your coverage begins. There is also a waiting period, which usually runs from 0-90 days, but sometimes is longer. So, you need to check and consider what you can afford to cover before your benefits kick in.
4. How long will your benefits last. How long do your benefits need to last; a few years? 10 years? Although this is somewhat of an unknown, you need to take into account if you are suffering from a chronic illness and what kind of funds you have at your disposal.
5. What will your benefits be worth once they are paid out to you. Not only should you look at how they are paid out but what is exactly paid out in regard to inflation. Many policies offer some sort of inflation protection. Considering long-term health care costs only seem to be rising, this protection translates into having a financial cushion protecting your assets.
6. Which resources can help you make the best decision. There are three resources you need to use to make the best decision: ratings companies, a reliable agent and yourself. Make certain you choose a company who has been in business and is highly rated by A.M. Best, Moody;s, Standard & Poor;s, or Weiss. Looking for professional assistance with long-term care insurance and which of the policy meets your needs? Get a free long-term care insurance consultation and quote. Finding an agent is tricky. Many people are “referred” by carriers or internet searches. This is akin to mushroom-picking by memory;it is not in your best interest. Look for an agent that sells a variety of products, but specializes in LTCI.
Also, if the agent’s commission rates are standardized, then it will not be to his/her advantage to upsell you, in terms of financial aspect. And although most of these decisions can and should be aided by professionals, remember that it is your job to be vigilant. Use common sense along with the help of professionals. It can be extremely hard to determine what your long term care needs are. One very good place to start is by looking at what many consider the baseline;that is, what should the federal government offers to its employees via the Federal Long-Term Care Insurance Program.
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