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Long-Term Care Insurance Is An Emotional Decision




When it comes to money, most people get emotional. Making financial decisions is tough for many people.


When you buy a house, it is usually fun and exciting! When you purchase an auto or homeowners insurance, it may be frustrating, as you feel it is way too expensive.

One of the hardest financial decisions to make in your life is whether to purchase Long-Term Care (LTC) insurance. LTC insurance pays for a nursing home or home health care aid when you need additional medical care.

The reason that it is difficult to make this type of buying decision is because there are a lot of feelings and emotions involved related to aging and illness. In addition, it is emotional because of the amount of money that might be needed for this type of medical care.

Do you know someone who is currently in a nursing home or receiving care at home? Have you had to clean up after a parent that didn’t make it to the bathroom on time? How will your family feel about taking care of you when you are sick and need help? Do you think LTC insurance is too expensive and don’t want to part with the money?

Recently a friend whose mom is 80 years old and has had numerous illnesses over the years contracted a bacterial infection. The infection started with a trip to the emergency room and a four-day hospital stay. Mom was then sent home to recuperate, even though she was still in pretty bad shape. The illness was so bad that my friend had to stay home from work for several days to take care of her mother.

While she loves her mother, my friend quickly realized that taking care of mom was a lot harder than expected. It was uncomfortable to help her with bathing. It was aggravating to have to do all of the things that mom did for herself before she was sick. Watching her mom in pain was very difficult and she did not feel equipped to take on this responsibility.

While staying at home, new considerations came into play. How much vacation and sick time would she have to use up that she had earmarked for a family vacation? Would mom be better off in a nursing home with closer supervision? Would a home health care aid be sufficient? How much would a person that specializes in senior care cost? What is mom going to think about all of this?

When it comes to caring for a loved one who needs additional medical care, it’s not easy. The cost of care has skyrocketed, and the average cost of a nursing home is more than $200 per day nationally. Rates for a home health caregiver are over $20 per hour. These fees add up quickly.

If you are over the age of 50 in good health and haven’t considered buying LTC insurance, then you should put yourself in the shoes of my friend. Ask these questions and determine what you would want to happen if you should become ill and aren’t capable of taking care of yourself?

While paying for insurance that you may never use feels like a waste of money, what if you eventually have to pay for a nursing home? If you do get sick, how will everyone feel knowing that the finances are mostly covered? Conversely, how will you feel if you didn’t purchase LTC insurance when you had the money to pay for the insurance?

When considering purchasing LTC insurance, be aware that it will be emotional. However, having to pay for a nursing home is both emotionally and financially painful. Sometimes spending the money up front for long-term care is well worth not having to go through the emotional and financial drain of paying for this care out of your pocket. Think about it now so that your loved ones won’t have to deal with it later!


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1 in 3 Policyholders Use Their LTCI Benefits, Study Finds


crowd-300x200LTC Tree, a network of licensed agents, recently conducted a study to find how many policyholders actually end up using their long-term care insurance benefits. Based on their analytics and internal data, the organization found that one in three policyholders use their policy.

On average, the need for long-term care is about 50 percent for the general population, according to industry statistics. However, results of the study show that one-third but not all policyholders will tap into their coverage. Data reveals two reasons for this: First, they go through life not experiencing a long-term care event and second, their need for care services is shorter than their policy’s elimination period.

How Long Benefits are used

The average length of a long-term care insurance claim is 3.9 years. Meanwhile, the study found that 15 percent will use their benefits for one year or less, while 18 percent will need coverage for one year or more.

Is LTCI worth it?

Evidently, not everyone will use their long-term care insurance benefits, but according to the organization, one in three is still a high statistic. Industry experts note that’s a number you don’t want to take a gamble on, especially in terms of the cost of long-term care and the future of your finances.

With that, many can say that yes, LTCI is worth it. Getting your money’s worth is not only measured through how much of your benefits you were able to use, but also in the amount of peace of mind having the coverage can give you. Whether you triggered your benefits or not, the real worth of LTCi is the protection it provided over your assets and family against possible long term care events, according to some financial planners.

The Advantages of LTCI

Long term care insurance is essential to have because it gives the following:

  • Financial Protection – Just like any type of insurance policy, LTCI offers protection or assistance when a long term care need presents itself. Having this policy in place will protect your assets and will prevent your nest-egg from being depleted due to care expenses.
  • Quality of Care – Because LTCI covers for a variety of care settings, the quality of care is ensured. When you have this policy, the quality of your care will not be compromised because of financial reasons.
  • Options – LTCI is designed to pay for a variety of care services and providers. With that, you have a lot of options in terms of who will take care of you and where care will be administered, whether at a facility or at home if possible.
  • Independence – Being a policyholder will enable you to retain your independence to some extent. When you have LTCI, you don’t need to rely on your family and loved ones for your care needs. You are sparing them from the financial and emotional toll of caregiving and at the same time, you are able to still experience a good quality of life.
  • Peace of mind – More than anything, LTCI offers a sense of assurance that you and your family are protected from the impact of long term care. That, in itself, can be worth more than any amount.


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One Tax Deduction that Can Help You Save Money

tax2Preparing and filing taxes is a drag. What’s worse is missing a hefty tax deduction. Here’s one deduction that will potentially save you thousands of dollars. You don’t want to overlook it.

Significant savings
The government offers tax incentives to encourage Americans to take responsibility for their future long-term care needs. You can possibly write off medical expenses, including long-term care insurance premiums, if you itemize deductions. For the 2013 tax-filing year, you may deduct only the amount by which your total medical expenses exceed 10% of your adjusted gross income or 7.5% if you or your spouse is 65 or older.

The amount of qualified long-term care premiums you can include as medical expenses is limited up to the following amounts:

Taxpayers Age at End of Tax Year

Deductible Limit
40 or younger $360
41 to 50 $680
51 to 60 $1,360
61 to 70 $3,640
71 or older $4,550

Sources: IRS and American Association for Long-Term Care Insurance.

If you own a long-term care insurance policy, don’t forget this potential tax deduction. On the other hand, if you don’t own a policy, this tax savings serves as a big reason to consider one.

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Independent Living: Is It for You?


When people plan for their retirement or golden years, location is major point of decision. For those who want to remain active, independent and surrounded with individuals they can easily relate to, independent living can be a viable option.

Who Should Consider Independent Living?

Independent living, as its name suggests, is suitable for retirees who wish to remain independent yet want to reside in a community that offers a higher level of security than their own home.

Those who opt to stay active in their golden years and prefer to thrive with people of the same age are also encouraged to explore the option of making independent living communities their retirement spot.

Furthermore, independent living can be the best choice for retirees who are still able to manage their medications, make doctor’s appointments or simply move around the house and community without assistance. If you need help in performing any of these tasks, care settings like assisted living facilities or nursing homes may be more suitable options for you.

Different Types of Independent Living

If you’re looking for an independent living community for you or a loved one, you need to be familiar with its three different types and how they differ. These are:

1. Retirement Communities

As its name implies, retirement communities are neighborhoods where retirees opt to live in order to retain an active lifestyle and bustling social life among their peers. However, retirement communities don’t offer much as the only service available in this type of setting is grounds maintenance. Most activities and tasks such as homemaking are still done by the residents. Likewise, the retirees are also the ones who organize social activities or programs in the community.

2. Senior Apartments

Independence plus luxury—this is what senior apartments offer. As opposed to retirement communities, this type of independent living obviously offers a lot.

Senior apartments offer a wide range of services—from cleaning down to transportation. Residents who don’t want to bother cooking for themselves have the option to eat their meals at the community’s common dining area. Furthermore, senior apartments may offer different levels of care, but they still differ from assisted living facilities. Residents are required to have a higher level of independence in terms of doing their own laundry, managing their medication and bathing.

Those who want to remain active, create relationships with peers and experience a stress-free retirement, moving to a senior apartment is a smart move.

3. Low-income Housing

This type of independent living can be suitable for those who may have financial restrictions. The cost of renting in this community is cheap because it is financially supported by the government and charitable organizations. Before you can transfer into this community, you need to meet the income qualification that is set by the state.

Most people want to remain independent even in their golden years. If you’re healthy, active and to be socially engaged, independent living can be a suitable retirement spot for you.


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How to Include Long Term Care Insurance in your Financial Plan

A good financial plan has two integral parts. The first one is focused on building wealth and creating a strategy in order to turn savings and investments into a source of steady income in retirement. The second is about creating a sound contingency plan for unforeseen events such as long term care.

Hoping that you’ll never need long term care may be a good mindset, but positive thinking will not protect your finances from the damaging effects of long term expenses to your nest-egg, quality of life, and loved ones.

Estimates show that 7 out of 10 65-year-olds will need long term care and 40% of younger individuals aging 18 to 64 years old will also require care services at one point. Based on these figures, anybody is vulnerable to needing long term care—may it be due to accidents, old age, frailer health, health problems or cognitive decline.

Over the years, the care services and settings have a continuous increase in rates. From 2012 to 2013, the cost of staying in a nursing home and assisted living facility has increased by 4%, while in-home care rates have hiked up by 1%. Based on this data, the cost of care services is not expected to go down in the coming years, especially that there’s an impending rise in demand for long term care due to the influx of baby boomers entering their golden years and people having longer life spans. In fact, it is estimated that long term care expenditures will reach $364 billion by 2040.

Facing long term care without any plan is one of the biggest financial dangers that you can face. The good news is, you can manage this risk through long term care insurance—a policy that’s specifically designed to pay for all levels of care and a wide range of care service and settings.

Though having long term care coverage is a sound strategy, it’s important to determine how you can factor in a long term care insurance policy in your financial plan or if it matches your situation in the first place. Read the full article here:

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What Kind of Care Will You Need?


The kind of care that you will need will be highly dependent on the condition of your health as well as you capabilities to perform the Activities of Daily Life (ADL) in the future. Evidently though, none of us know what the years ahead may bring.

It is estimated that 70% of 65-year olds will need to be administered long term care. Long term care, typically, is giving assistance to someone who’s having a hard time performing tasks such as bathing, eating or using the toilet due to old age, illness or injury.

How to Determine Possible LTC Needs in the Future

The exact type of care you will need can’t be spelled out in black and white if your health is still at its prime state. On the other hand, it is comforting to know that you can actually assess or estimate what kind of elder care services you might require in the future. Here’s how:

Seek Assistance from Social Services

Social services can provide you an assessment for the types of long term care that can be best suited for you. The plan will be based on what your doctor recommends as well as your health background.

Check your Family’s Health Background

On the other hand, if you’re still far from retirement age and your health is still well, checking your family’s health background is advisable too. Through this, you will know if you’re likely to inherit hereditary conditions. That way, you can prepare for its onset and your probable elderly care requirements.

Factor in your Lifestyle at Present

Another way is to consider your job and lifestyle now. See how it can affect your health not only at present, but also in the long-term. You may seek the advice of a professional to help you with this.

What will take place in the future is unknown to us, but that doesn’t mean that we should not prepare for it. Whether you’ll require home care or stay in a long term care facility is unknown. When it comes to long term care, proper assessment can be beneficial if you want to determine the kind of care you will need.



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Long Term Care Insurance Companies


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Long term care insurance companies develop and offer products that help customers prepare for the costs of care in the future. They are also called carriers, especially by professionals and agents. One of the most important choices you’ll make when you purchase an LTCi policy is from which carrier you will buy it from, as this choice will dictate your policy’s strength, flexibility and affordability.

Carrier Ratings and Reviews

To help consumers in making this important choice, several institutions continually grant long term care insurance company ratings to the carriers. These ratings show how financially sound the carriers are in meeting the claims of policyholders, as well as how stable and dedicated they are in providing products and services to the market.

Insurance Rating Companies

Carrier reviews are conducted by three major insurance rating companies: A.M. Best Company, Standard and Poor’s and Moody’s Investor Service. It’s recommended to look up the ratings of the insurance companies you are considering to purchase a policy from.

A.M. Best Ratings

A.M. Best only releases its ratings for companies with a licensing fee, so you will need to call the insurance company and ask for their A.M. Best rating, or you may also ask your agent for this information. Here’s a brief overview of their ratings:

  • A++ and A+: Superior (superior overall performance, very strong ability to meet obligations to policyholders)
  • A and A-: Excellent (excellent performance, strong ability to meet obligations to policyholders)
  • B++ and B+: Very Good (very good overall performance, good ability to meet obligations to policyholders)
  • B and B-: Adequate (adequate performance, can meet obligations to policyholders but vulnerable to economic or underwriting changes)
  • C++ and C+: Fair (fair overall performance, can meet current obligations to policyholders but vulnerable to economic or underwriting changes)
  • BC and C-: Marginal (marginal overall performance, can meet current obligations to policyholders but very vulnerable to economic changes)
  • D: Very Vulnerable (poor overall performance, can meet obligations to policyholders but extremely vulnerable to economic or underwriting changes)
  • E: Under State Supervision (under state insurance regulatory authority supervision, control or restraint)
  • F: In Liquidation (under order of liquidation by court of law, or voluntarily liquidated)

Visit for more information.

Standard and Poor’s Ratings

Standard and Poor’s reviews the financial strength of more than 300 insurance companies around the world. Here’s a brief overview on their ratings:

  • AAA: Superior (superior financial security, overwhelming capacity to meet obligations)
  • AA: Excellent (excellent financial security, strong capacity to meet obligations)
  • A: Good (good financial security, capacity to meet obligations susceptible to economic or underwriting conditions)
  • BBB: Adequate (adequate financial security, capacity to meet obligations susceptible to economic or underwriting conditions)
  • BB: Adequate (adequate financial security, capacity to meet obligations vulnerable to economic or underwriting conditions)
  • B: Vulnerable (vulnerable financial security, capacity to meet obligations particularly vulnerable to economic or underwriting conditions)
  • CCC: Extremely Vulnerable (extremely vulnerable financial security, capacity to meet obligations is highly questionable)
  • NR: Not Rated

Visit for more information.

Moody’s Ratings

Moody’s also reviews the financial stability of investment institutions, not just insurance companies. Their rating system varies slightly with an additional modifier or 1,2 and 3, which designate how high a company is in its rating category.

  • AAA: Exceptional (exceptional financial security, any changes will not heavily impact its position)
  • AA: Excellent (excellent financial security, but long-term risks are larger)
  • A: Good (good financial security, but can be susceptible to changes)
  • BAA: Adequate (adequate financial security, but vulnerable to changes)
  • BA: Questionable (questionable financial security, moderate ability to meet obligations)
  • B: Poor (poor financial security, low ability to meet obligations)
  • CAA: Very Poor (very poor financial security, may default on obligations)
  • CA: Extremely Poor (extremely poor financial security, often in default of obligations)
  • C: Lowest Rated Class (may be unable to offer any financial security)

Visit for more information.

By knowing how well rated your prospective insurance companies are, you will be able to make a sound decision on how reliable and secure your LTCi policy will be.


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