LONG TERM CARE INSURANCE
Facts an applicant should know about long-term care.
Why should I own a
Long-Term care policy?
To help prevent your assets and retirement "nest egg" from being destroyed by
the catastrophic cost of long- term care. The definition of INSURANCE is
distribution of risk. At least one out of 3 of us will need long- term care
during our lifetime. When we "self insure" this risk, we are playing "Russian
roulette" with our finances, and retirement plans. Why not transfer this
unacceptable risk to an insurance company, specializing in this protection?
You would not consider being without coverage for your auto, or home, so why
leave yourself and your family exposed to this potential catastrophe?
Comparing risk over the lifetime of 2,000 people.
2 will experience Major Fire damage to their home.
8 will experience Total Loss of Auto
500 will receive long-term care of $103,000 or more.
What types of long-term policies are available?
In California, there are three to choose from:
|
|
1. Home Health care only plan.
2. Nursing Facility and Residential care only plan.
3. Comprehensive Long-Term care plan, (includes both 1 and 2.)
|
California's long-term care plans are the best of
all the states, due to the passage of several pieces of legislation during the
past 3 years.
When is the best time to obtain long-term care
coverage?
The ideal time is from ages 40 to 65. The younger the
age, the lower the premium. At younger ages, you are less likely to have health
problems.
At what ages are these plans available?
Depending on the carrier selected, long-term care
plans are available from age 20 to 99 years.
Who should I select to advise me on long-term care
insurance?
Only a limited number of agents and brokers are
licensed to sell long-term care plans. If possible select an agent who has
marketed this product for a number of years. Select an agent who represents
several long-term care companies, because a "captive agent" who represents only
one carrier, will not have the range and choice of plans that best fit your
particular requirements, including cost comparison, insurability, strength of
company, etc.
How important is it to insure in a large, financially
strong company?
Very Important! When the time arrives for you to call
upon your company to deliver the long-term care benefits you have been depending
upon, it must be financially solid, well managed, and have top A or better
solvency ratings and be fully committed to providing long-term care benefits to
its insured's.
What benefits or features should I choose
for solid coverage?
If it is within your budget, and if you are under the
age of 75, choose lifetime benefits. At ages over 75 lifetime benefits are less
important unless cost is not a limiting factor for you. Benefit waiting periods
greatly affect the cost of the plan you select. A zero day elimination is the
most costly. If you are able to self-insure for 30, 60, or 90 days, your premium
will be lower. Generally, the daily benefit can range from $50.00 to $250.00 per
day for nursing facility or residential facility care, while home health care
can range from $50.00 to $200.00 per day. The younger you are the more important
an inflation rider becomes. This benefit is often referred to as COLA, (cost of
living adjustment). It comes in a simple 5% per year increase. The compound COLA
is the most desirable. Such a rider greatly affects the amount of premium you
pay and results in a 30% to 40% premium increase, depending on your age at
issue.
For what period of time must I pay premiums?
Most plans require to pay premiums for as long as you
wish to continue your coverage. However, some companies feature a 10 pay plan,
wherein your plan is fully paid up for the rest of your life. Some carriers
offer a single premium payment and your policy is immediately paid up for life.
Can I buy a plan that features return of premium after
6 or 10 years?
This feature is offered by some companies, however it
will often increase the premium by 35 to 45%. Usually only a percentage of
premium paid is refunded, less claims paid. In some policies, when return of
premium is refunded, the policy ends. In other plans, the coverage continues.
Most persons believe the return of premium is not a very cost effective option.
What are some common optional benefits available
with long-term care plans?
The most common option is the
inflation benefit (COLA), increases policy benefits 5% each year,
simple or compound. Survivor benefit; if one spouse dies after
a specified time period (usually 6 to 10 years), the remaining person has a
fully paid up policy for life.
What are the top five causes of long-term care?
|
HOME CARE |
|
NURSING HOME CARE |
|
Circulatory |
23.8% |
|
Circulatory |
25.4% |
|
Injury |
13.7% |
|
Injury |
19.0% |
|
Cognitive |
12.2% |
|
Cognitive |
10.2% |
|
Cancer |
9.9% |
|
Cancer |
9.9% |
|
Arthritis |
8.2% |
|
Arthritis |
4.4% |
|
|
67.8% |
|
|
68.9% |
The female face of long term care
|
LONGER LIFE |
Outlive spouse by an average of 10 years
|
68.9% |
90% RESPONSIBLE FOR THEMSELVES
|
48% Widowed
36% Divorced
6% Remained single
|
MORE CHRONIC AILMENTS
How does Medicare cover nursing
care?
| QUALIFICATIONS |
COVERAGE |
| 3 day prior hospital stay |
First 20 days --- 100% |
| Admitted within 30 days after hospital stay |
21st-100th day --- All but $133.50 per day co-payment |
| Admitted for same condition as treated in hospital |
21st-100th day --- All but $133.50 per day co-payment
| The facility is Medicare approved |
|
How does Medicare cover home
care?
NOTE: Personal Care is only covered in conjunction
with skilled
services.
| SERVICES |
COVERAGE |
| Part-time professional/skilled |
Home visits --- 100% Unlimited |
| Part-time home health aides |
|
| Durable medical equipment |
Medical equipment --- 80% Unlimited |