Long term care is an important part of any financial plan. The best way to manage this risk is through long term care insurance—which is a policy that’s specifically designed for it. However, only less than 8% of American adults have purchased long term care insurance. One of the reasons is the cost.
The good news is, the price of long term care insurance can be manageable. Here are the ways on how you can keep your premiums fit to your budget.
1. Buy coverage that you can pay for today and in the future.
Only sign-up for a level of coverage that you can actually afford. In order to keep your finances in order, your premiums should not amount to more than 7% of your budget. Furthermore, you need to anticipate premium increases in the future. Should there be a price hike; make sure that you can afford to pay a 10 to 20% increase.
Meanwhile, if you think your budget can’t handle the possible increase in rates, find ways on how you can streamline your policy so that you’ll get to stay insured without paying extra.
2. Buy early
If you want to get a lower rate for long term care insurance, you should buy early—ideally, in your 50s. More so, buying while you’re young can lock in discounts for simply being healthy. This price reduction will continually be in effect even if you develop conditions down the road.
3. Streamline your coverage.
How much long term care need you’ll need is still unknown as of now. You can make estimates based on current statistics but it will not give you an exact picture of how much care you will require down the road. This could be the reason why you would opt for an all-inclusive policy.
However, you need to understand that a more comprehensive range of benefits will cost higher. If you want to keep the cost of your policy low, you may want to limit the features of your long term care policy. Instead of going for lifetime duration, why not set your policy to only last for several years? Furthermore, you can stretch your elimination period so that your benefits will be used for bigger and more substantial care expenses. Keep in mind that it’s better to have a limited coverage than none at all.
4. If you’re married, go for a shared care policy.
Couples can broaden their coverage without the hefty cost through a shared care rider. This additional feature pools their benefits together. As a result, each spouse has an access to a range of coverage that’s twice the extent of his or her individual policies.
5. Choose an insurance company carefully.
The cost of policies can vary by insurer. Two insurers may offer the same level of coverage for different prices. The other may offer it for a lower price while the other may sell it for 90% more. Shop around. Buy from an insurer that offers the most reasonable deal in order to avoid overpaying for your policy. Apart from their rates, you also need to look at their ratings, claims payment history and financial stability.
It’s true that long term care insurance will come at a cost, but it is flexible enough to match almost any financial situation. All it takes is exploring the different ways on how you can keep it affordable and you can do it when you go to my website.