What is Long Term Care Insurance and Why You Should Consider Getting it?

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Long term care insurance is a rather new product on the market. It is often overlooked in favor of life insurance, disability insurance, health insurance and other long-standing insurance products. Others focus instead on saving for retirement and their kids’ college. However, the need for long term care insurance has never been greater. Let’s learn what long term care insurance is and why you should consider getting it long before you need it.

What Is Long Term Care Insurance?

Long-term care insurance helps pay for a variety of long-term care services, though the biggest tab is for nursing home care. The average nursing home costs around 84,000 dollars a year. Long-term care insurance can also help pay for in-home care; this can cost around 57,000 dollars a year assuming 40 hours a week of assistance. If a home health aide visits three times a week, the average bill is around 20,000 dollars a year. Note that these costs are typically not covered by health insurance.

The premiums for long-term care insurance go up with age. Once you hit 80, it will be almost impossible to afford a long-term care policy. Conversely, the sooner you sign up, the lower your premiums, and you’re almost certain to continue the policy even as your health declines. The premiums will also depend on the type of benefits you pick, how long you have to wait before benefits start, and how many years of coverage you select. Let’s look at a few of the reasons to get long-term care insurance.

To Protect Your Loved Ones from Being Financially Drained

Nearly three quarters of Americans become impoverished after a year in a nursing home, because Medicare doesn’t cover nearly as much as they expected. For example, Medicare generally only pays for skilled care after a three-day hospital stay and doesn’t cover assistance for dialing living. Roughly half bought long term care insurance as part of their retirement plan. This is understandable given that roughly three quarters of us need long-term care in some form before we pass.

Even worse is the fact that nursing home costs are increasing at 5 percent a year. While it can be hard to pay for the more than 50,000 a year it costs now, it may be impossible when you need such care. Buying long-term care ensures that your family is strained trying to pay a thousand dollars or more a week for your care. If you want to find out how much you’d pay for various levels of coverage, you can visit a site like Insurance Geek at insurancegeek.com. You’ll also be able to compare between various policies and find the best coverage for you.

To Maintain Your Financial Independence as Long as Possible

Long-term care insurance helps pay for expensive long-term care. This can help older adults maintain their financial independence such as relying on insurance to pay for home health aides instead of moving into a Medicaid-paid care facility. It may also eliminate the need to borrow money to pay for long-term care.

Roughly ten percent of Americans have purchased long-term care insurance. However, you can’t afford to hit retirement without such a policy in place.