Long-Term Care Insurance – To get or not to get?
For those who can afford it, Long-Term Care Insurance is becoming increasingly popular as a means of paying for nursing home or home care. The problem is choosing a good policy and being able to afford it.
Here are a few Long-Term Care Insurance rules of thumb:
- Only buy policies that are approved in your state. Generally, these are individual, as opposed to group, policies. A group policy may be just as good, but since it is not regulated you must be extra careful in seeking professional assistance in examining it. In addition, if you do require Medicaid assistance despite the fact that you own a Long-Term Care Insurance policy, owning an individual policy will protect you from estate recovery; owning a group policy will not.
- Buy enough coverage. It will not do you much good to have insurance coverage if it is insufficient to meet your cost of care. Anticipate your need for the insurance to occur at least ten years off and anticipate the inflation in Long-Term Care Insurance costs to exceed the growth in your income by at least 5 percent a year. However, there is another school of thought that recommends purchasing enough coverage to pay for assisted living if you can only afford the lower premiums.
- Buy home care coverage. If you have nursing home coverage and not home care coverage you may feel compelled to move to a nursing home in order to save money. Do not put yourself in that bind.
- Only buy the insurance if you can afford it. The guidelines above will all increase the cost of the policy. But if you cannot afford them, then do not buy the insurance. How do you know if you can afford a certain premium? A rule of thumb is that payment of the premium should not affect your standard of living. So you can afford the premium if you are using money that you would otherwise set aside to add to your savings. An alternative would be to purchase an annuity that pays sufficient benefits to cover the long-term care insurance premiums.
Long-Term Care Insurance is not an option for you? You can still qualify for nursing care without spending your entire life savings. How? A properly drafted estate plan using Income Only Trusts can achieve the same goal.
Want to lean more? Contact our office for a free consultation.