The Value of Long-Term Care Insurance


Approximately 8 million Americans have long-term care insurance. The vast majority of policyholders are satisfied with their coverage and are benefiting from the financial security, peace of mind, and higher quality of life that long-term care insurance provides. As individuals near retirement age, there is greater awareness and concern regarding the financial reality associated with long-term care. Yet, far too many individuals put off planning for these expenses until they actually occur, at which point it becomes increasingly challenging to cover the cost of care.

 

Peace of Mind 

How do you want to spend your retirement years? The federal government estimates that, on average, a 65-year-old today is likely to need some long-term care services for three years during his or her lifetime. Twenty percent will need that care for five years or more.  When you retire, your hard-earned savings will be the key to living your life – with your family – the way you want. Having long-term care insurance can help you make that happen.

 

Overwhelming Customer Satisfaction 

An overwhelming majority – 97 percent – of policyholders receiving benefits from their long-term care insurance policy are satisfied with how their claims are handled, according to a study released by the U.S. Department of Health and Human Services. Two in three informal caregivers indicate that the presence of private insurance benefits has reduced their level of stress. 

 

Financial Security 

One year in a U.S. nursing home averaged more than $80,000 in 2013, and in some regions of the country it can cost twice that amount. Long-term care insurance can protect your retirement savings, allow you to receive care at home, and ease the burden on your family members. Beneficiaries receive an average of 14 more hours of personal care per week than those without insurance. In addition, long-term care insurance reduces a person’s chances (by 66 percent) of having to spend down his or her life savings to the point of impoverishment to qualify for Medicaid assistance.

 

Frequently Asked Questions about Long-term Care Insurance 

What is long-term care insurance? 

Is long-term care insurance affordable? 

What is the cost of waiting to buy long-term care insurance? 

What protections are in place for consumers? 


What is long-term care insurance?  

Long-term care insurance provides benefits to help you and your family manage the potentially significant costs of long-term care. It helps you to protect your financial assets so that you and your family will have the financial resources to pay for the care you may need and can focus on your life together instead of worrying about your finances. This takes the potential burden of care off of your family and gives you the peace of mind that you will be able to afford the type of care you need and choose. Long-term care insurance costs only a fraction of what it would cost you if you had to pay for your care needs completely on your own.

 

Long-term care insurance covers assistance that may be necessary due to aging, an accident or lengthy illness, chronic health conditions and/or physical disabilities, such as a stroke, Alzheimer’s disease, Multiple Sclerosis, or Parkinson’s.

 

Over 85 percent of people report a preference for receiving care in their home in the need arises for long-term care services, according to a report from Merrill Lynch. Long-term care insurance gives you the ability to choose the type of care you prefer. Plans can include coverage of home care, hospice care, respite care, adult day care, care in assisted living facilities and nursing homes and some plans may include coverage for some types of informal (family or non-professional) care. Some plans simply pay you a cash benefit for each day you are disabled so that you have total freedom to decide which services and providers you will use.

 

Is long-term care insurance affordable?  

Evidence shows individuals who choose LTC insurance coverage reduce their chances by 66 percent of having to spend down assets to the point of impoverishment to become eligible for Medicaid. You’ve worked hard to build your savings and long-term care insurance is a way to help protect those savings. You can manage the costs of long-term care insurance by choosing a plan that matches the financial and retirement goals that are right for you and your family. Since the cost of long-term care insurance coverage is based on the age when you apply, in general, the younger you are, the lower your premiums.

 

What is the cost of waiting to buy long-term care insurance?  

The cost of waiting to buy may be significant – both in terms of how much you will pay as a result of buying it at an older age, and in terms of whether you might not qualify if you develop a health condition that makes you ineligible to obtain insurance. For your peace of mind, you should consider buying long-term care insurance for you and your family between the ages of 40-50. Generally, the younger and healthier you are when you buy long-term care insurance, the lower your premiums will be. Waiting too long could decrease your likelihood of being accepted and will increase the cost of your insurance.

 

What protections are in place for consumers?  

The National Association of Insurance Commissioners has established detailed industry-wide standards to protect consumers. Most states have adopted these standards and require companies selling in those states to adhere to them. These include protections against arbitrary rate increases, disclosure requirements for all privacy provisions and flexibility for consumers to adjust their policy benefits to meet future needs and reduce costs should they choose to do so. Another important consumer safeguard – buy insurance from a company you can trust to be around in 20-30 years and check the financial rating and claims paying abilities of the companies you are considering.