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Tips on Long-term Care Insurance

When it comes to Long-Term Care Insurance, many people are still very much confused and uninformed, and not only because this type of insurance is relatively new on the insurance market. They do not understand the probability of requiring such service, the perspectives of such insurance, and underestimate the cost of long-term care. They are not aware of what Long-term Care Insurance policies cover, and do not understand how and when they pay benefits.

In this respect, Long-term Care Insurance is similar to Homeowner's or Car Insurance coverage: you purchase it in hope you will never really need it, but your home and your car are rather valuable assets not to be protected. The same is with long-term care: people prefer not to think about the diseases, death and frailties of old age. But there are a number of aspects we still definitely need to consider as we age.

Long-term care situations include people living with stroke, Alzheimer's, Multiple Sclerosis, Parkinson's, Spinal Cord Injury, Cerebral Palsy, accidents and other conditions.

Care-giving may have not only physical and emotional impact on the family of a person who needs long-term care, but it is most likely to have a financial impact on them too and change their lifestyle altogether. Taking care of a person who needs help in basic everyday living activities may mean missing time from work, changing from full-time to part-time employment, or even leaving the job to be able to provide sufficient care.

Obtaining Long-Term Care Insurance coverage protects and controls your assets, gives you an opportunity to choose the type of care you want to receive if needed, and makes your family a little less stressed at this point etc. Your financial resources at the time of need will determine your options of the place where you will receive care: in your home, in an assisted care living facility, adult day care, or nursing facility. Being insured provides for an opportunity to pay more attention to the quality of care rather than to trying to find resources to pay for it.

It may turn out that you have to pay for long-term care expenses out of pocket, which may involve borrowing from an investment or retirement account, selling off assets, or taking out a loan against your Life Insurance. Long-term Care Insurance will protect a much larger portion of your financial or retirement plan and won't deprive you of your valuable assets.

Purchasing this type of insurance involves considerable preparation and knowledge. Before buying Long-term Care Insurance, consider the following tips:

— Carefully consider your needs and situation. Calculate your income, your assets and your budget. It is important to purchase a long-term care policy long before you expect to need the benefits it pays. The older a person is at the moment of obtaining a long-term care policy, the higher premium he/she will have to pay. In addition, the chance of not meeting the medical underwriting standard rises. Medical conditions are likely to increase the premiums.

— Make sure you can afford paying premiums both now and over the time. If you buy LTC insurance when you are in your 60s you may not need it until you are in your 80s. Also, it is necessary to determine whether you can afford to supplement your policy either out of income or assets. Whatever your situation is, you should never feel pressured or urged to purchase a policy.

— Take your time to thoroughly research long-term care costs in your area. Mind that costs and coverages can vary widely. You will find that policies and services offered may differ between insurance companies. Contact several companies prior to the purchase. It is necessary to check and compare the Long-term Care Insurance benefits and exclusions beforehand. Most policies will give options of benefit amounts, duration of benefits, inflation protection, non-forfeiture benefits and elimination period.

— Find out everything about the facilities you have to be in to receive coverage, and the limitations of coverage. You are advised to consider policies that will pay for care in a nursing home, an assisted living facility, and home. "Home care only" policies won't provide the necessary level of care in cases such as a massive stroke or when it comes to the necessity of professional medical care. The services for assisted living facilities may involve additional charges, for more intensive care, for example.

— Purchase a policy only from a financially stable company with a high rating and years of experience in selling this type of insurance. Confirm with your state insurance department that the insurer of your choice is licensed and works in your state legally. Find information on compliant ratios, the history of the LTC insurance company's rate increases as well as on how fast they pay claims. Find out if your state protects LTC insurance buyers from unreasonable rate increases. In other words, take a buyer-beware approach to Long-term Care Insurance policies.

— Buy a policy which will provide not less than 5 percent compound inflation protection at a realistic percentage. Remember that nursing home costs are constantly growing. A policy without inflation protection is practically useless and tends to cover only half the dollar value of the daily benefit after inflation. Experts advice to consider a policy that provides four years of coverage, has a 90-day wait period and five-year compound and automatic inflation protection.

— It's good if you can afford to cover part of the elimination period. This way you may be able to reduce your premium significantly. Besides elimination periods, there are a number of other factors which affect the policy price: waiver-of-premium clauses, benefit amounts, and inflation.

Other tips concerning Long-term Care Insurance are referred to avoiding insurance fraud and common mistakes consumers make:

— Pay by check or money order rather than in cash. You are advised to write a check and make it payable to the insurance company, not the agent.

— Compare outlines of coverage for several policies and don't purchase the first policy feeling hurried to make a decision. Carefully read and understand a policy's fine print prior to making a final decision. Make it a point to understand all the terms and definitions used in a policy. Never sign a contract the terms of which seem somewhat confusing to you.

— Don't trust advertising more than your common sense and knowledge. Be skeptical. Don't give away information about Medicare or your insurance over the phone.

— Explain the full extent of your medical condition. Make sure you fill out the application accurately. In case information about the state of your health is incorrect or incomplete, the insurance company won't pay your claims. Refer the carrier to your doctors' records of the care provided to you.

— Arrange an automatic premium payment. In case you have your premiums automatically deducted from your bank account and paid electronically by your bank, paying your statements won't be delayed due to your illness, for example, and your coverage won't lapse.

— Make sure your policy clearly defines all criteria for qualifying for benefits, explains in detail the claim-filing process, as well as your rights to appeal the company's adverse decisions.

— If Long-term Care Insurance is still very confusing for you, seek expert advice concerning long-term care planning and understanding the options of this insurance product in particular.