Who should consider buying long term care insurance?

Long term care insurance policies are for those who can afford monthly premiums and have assets of $150,000.
You should consider the following factors before purchasing long term care:

• Life expectancy. The more we age, the more you will likely need long term care.
• Gender. Statistically women live longer than men. This creates a need for women.
• Your family. With a spouse, adult children, and other family members you care for, you may not need a policy for home health services. Instead, consider a policy that pays only for nursing home care.

Financial considerations when buying a policy

When you purchase a policy, be sure to ask about your finances:

• What are my assets? Will they change over the next decade(s)? Will my assets justify the expense of a policy?
• Current income? Will it change? Will I be able to afford the policy if the premiums go up significantly?
• If I retire, how will retirement affect my ability to pay premiums?

Decisions to make about your new policy

After purchasing a policy, decisions need to be made on what policy is the perfect fit.

What is the daily benefit amount for each type?

Most policies pay a maximum daily amount for your care

Choose your benefit amount wisely. Insuring the full cost of care is not necessary but can keep premiums down by planning to pay some of the cost yourself.

How long are benefits paid?

Needing long term care for over five years is small

Three to five year policies are more cost effective and budget friendly

What inflation protection is offered?

Inflation protection helps keep up with high cost services between the time the policy was purchased and when it is used

Being prepared for inflation means paying a higher premium today or pay high out-of-pocket costs later

Cost-cutting strategies to reduce premiums

Buy young

The simpliest way to get a low rate for long term care is purchasing it at a young age. A policy typically costs $1,500 a year for a 55 year-old, $3,000 on average for a 65 year-old.

Health is a big factor in cost savings. Having good health can lower monthly payments, while having a preexisting medical condition can increase costs, or lack of insurance coverage.

Sign up as a pair

Insureres can offer 20 to 30 percent discounts on premiums when signing up with family members.

Choose a shorter benefit period

On average, most people need long term care for three years. Choosing a policy covering three years versus five can lower premiums by 15 to 20 percent.

Lengthen the time you pay

Most policies have 30 to 90 day waiting periods, requiring out-of-pocket costs before the policy kicks in. Choosing a longer wait period can lower premiums as well.

Lower the daily benefit

The higher the benefit, the higher your premium is. Consider a plan covering two-thirds of the daily costs, with the other third from savings. This will cut your premiums by a third.

Buy lower inflation protection or no protection

Inflation-coverage protects from rising costs of care. Look for a policy with lower levels of inflation protection, or none at all, saving you 50 percent or more.

Alternatives to long term care insurance

While long term care insurance is a great service, it is not a fit for everyone. Check out other products that may help:

Life insurance

Some companies offer accelerated benefits rider to add to your life insurance policy for extra premiums. This allows you to use your death benefit early if diagnosed with long-term, catastrophic, or terminal illnesses. The amount you withdraw for long-term care is subtracted from the death benefit your beneficiaries would receive. Consider these “riders” that combine long-term care and life insurance.

Annuity contracts

Some contracts allow you to withdraw money without penalties for long term care services. If this is included, you may be able to pay for long term care expenses with your annuity.