Posts Tagged long term care coverage
In this video, Grace Herrington explains what long term care insurance is, and why you should have it. If you have assets you want to protect and want to provide for you and/or your family in the future, then long term care insurance might be a wise investment.
Watch the original video here.
LTC 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.
Having long-term care insurance is definitely a sound strategy but before anything else, one should determine how you can include this insurance product in your financial plan. Also, if this type of policy will perfectly suit your future needs. Long term care insurance comes with a hefty price tag, so it’s advisable so explore all your options to make your premiums affordable and also to make sure that you can cope up with premium hikes later on. My advice is this, figure out if you can afford to buy coverage first, consider your health and then discuss long term care with your loved ones. Follow these tips in order to make sure that buying long-term care insurance will benefit you in the future.
Just like Hansel, long term care is very hot right now. Sorry for the image I just couldn’t help myself and now that the comic relief is out of the way, lets get down to business. Why is long term care so hot right now? It shouldn’t come as a huge surprise when I tell you about the number of people entering retirement age and that this along with the rest of their financial future is squarely on their mind. Every single day, roughly 10,000 Baby Boomers are ready to enter their golden years and retire. Just to put that in perspective for you, that is enough retirees per year to match the population of the city of Detroit!
So why is long term care insurance so important? The care of long term care can cost a fortune. If something were to happen that incapacitated you to the extent that…
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Insurance company, New York Life, and long-term care administrator, Univita Health, identified the 25 most expensive markets for long-term care coverage based on the average annual rate of a private room in a nursing home.
The regions that have the most expensive markets are:
|Market||Annual Rate of Private Room in a Nursing Home|
|New York-Northern New Jersey-Long Island, NY-NJ||$155,180|
|San Diego, CA||$135,554|
|San Francisco-Oakland-San Jose, CA||$130,283|
|Philadelphia-Wilmington-Atlantic City, PA-NJ-DE||$129,239|
|San Jose-Sunnyvale-Santa Clara, CA||$127,130|
|Miami-Fort Lauderdale, FL||$116,931|
|Buffalo-Niagara Falls, NY||$116,577|
|Los Angeles-Riverside-Orange County, CA||$115,165|
|Detroit-Ann Arbor-Flint, MI||$114,716|
|Portland Salem, OR||$111,909|
San Jose, Boise, and Detroit are new additions to the list, while Anchorage dropped to second place from last year.
Univita Health asked 2,500 skilled nursing facilities, assisted living facilities, and home health care providers to complete 10,000 surveys between January 2013 and December 2013. Through their certification process, they were able to collect the data in a standard format.
Increasing Need and Cost
Statistics show that there is a rising need for long-term care services, especially now that baby boomers are entering retirement and senior years and more people are living longer. As the need rises, so does the cost of long-term care. According to a separate study conducted by New York Life, the average cost of nursing home care in the US has increased by 20 percent in a span of five years, from $73,935 in 2009 to $95,706 in 2014.
However, nursing homes are just one side of the spectrum. In fact, 50 percent of long-term care insurance claims start with home care, and its hourly rates have increased by four percent since 2009. When home care is no longer sufficient to meet a person’s needs, a transfer to an assisted living facility may be warranted. The rates of this care facility have hiked up by 34 percent in four years.
Overall, the cost of long-term care is not just about nursing homes. It’s about the series and levels of care that a person receives in the home, assisted living facility, and nursing home. Combined expenses from these settings can easily deplete a family’s savings.
Advantage of Having LTCI
Long-term care insurance also accounts for rate increases in long-term care settings through inflation protection. Through this feature, the benefits of a policy are increased over time to be at pace with the changes in cost of care rates.
With long-term care insurance, individuals can protect their assets and families from the financial breakdown that a long-term care event can bring. Apart from that, having a policy means having control over the kind of care that you will receive. It gives you more options and the freedom to decide according to your preferences.
Location: An Important Factor in LTC Planning
As you prepare for long-term care, it’s important that you know where you will receive care because cost of care varies per region. When you’re aware of the cost of care in your area, you will have an idea on how much long-term care insurance benefits you need or how much you need to save should you wish to self-insure for long-term care.
LTC insurance is important for a number of reasons. But what motivates most people to buy this policy is the fact that they don’t want to be a burden to their families. However, most people still don’t purchase this policy because of financial reasons. If you have a spouse or a domestic partner, this insurance policy is even more imperative to have for you. And the good news is couples can find this policy more affordable, thanks to the shared care rider.
What is a Shared Care Rider?
A shared care rider is an additional feature that couples can add in their individual long term care insurance policies. This is optional, but it is highly recommended as it can help them save money in terms of long term care coverage.
How Does it Work?
When you have a shared care benefit, you are added as a rider to your spouse’s policy. Meaning, you can use your partner’s long term care coverage and vice versa. In case you used up all of your benefits, you can tap into your partner’s coverage instead of signing up for a new policy—which is definitely more expensive. Add the fact that qualifying for a policy may not be as easy as before because first, you got older and second, you might have already developed medical conditions.
A shared care rider pools all your benefits together. Say, each of you has a long term care insurance plan that has a daily benefit of $200 and benefit duration of 5 years. That gives you 10 years worth of benefits—around $700,000—to work with. If you already used up all of your benefits, you can use your partner’s coverage so that your care expenses will be paid continually without having to sign up for another policy.
The Advantages of Having a Shared Care Rider
Savings are the main advantage of having a shared care rider. That’s why couples should take advantage of it.
This rider allows both partners to access coverage amounting to twice of what’s actually written in their policy. With the example above, we can see that if a couple purchases a shared care rider, they only pay for a 5-year policy yet they have access to 10 years worth of benefits.
A shared care rider usually adds 12% to 18% on top of the policy’s cost, but this extra amount is still cheaper as opposed to buying two individual policies that will last for 10 years each.
In addition, the validity of the shared care rider will not expire even if one spouse dies. The surviving spouse can still use what remains of the other’s benefits. In some instances, insurers may charge a percentage of the deceased spouse’s premium so that the surviving partner can utilize the remaining benefits.
Major life changes such as getting married or being in a committed relationship call for adjustments in how you manage and secure your finances. This is usually the time when the need for long term care insurance is greater. And it’s good to know that couples can have an extensive coverage even if they’re living on a budget.