Today, just a month’s stay in an average nursing home due to a critical illness can drain all your savings. Long term care insurance can protect you and your family members from unforeseen health disasters. However, the policies are quite expensive and not always required.
Moreover, there are many factors that need to be considered beforehand, including what assets you have to safeguard, whether or not you are capable to pay hefty premiums for years, and your odds of needing long term care. Still if you end up on the edge of getting one, there are ways to keep costs down.
How to insure yourself for less
Just buy the amount you need
While you put much stress on keeping costs low, make sure you get enough coverage that offers a cushion when needed. A good long-term care coverage is like having a fixed annuity during retirement. You’ll have enough income to cover for your livelihood. Most modest long term care policies will even cut down your out of pocket costs.Keep the matter of affordability in mind
New long term care policies have become less affordable (based on your age and health conditions), and some older policies too. Long term care policies have been around for decades. But it was during the last 5 years that the industry saw a surge in claims, which exposed an underwriting disaster. Leading insurers like Unum, Prudential, and MetLife have already delisted long term care. After sustaining heavy losses Genworth have now got state approval to increase premiums on older policies to sustain. Are you sure that the double digits premium hikes won’t happen again? While some long term care experts believe that the industry in on firm actuarial footing and we have left the worst far behind, some are skeptical since the baby boomers haven’t yet reached there. What will happen when they’ll start making claims?Decide how much you need
When you shop for a policy, check for things like daily benefits (commonly, $100-$200), the percentage (usually, 3%-5%) that’s increased during inflation, the payment duration and the elimination period or how long before the insurance kick in. While you can balance the daily benefit as per your standard of living and also to save, a 90-100-day elimination period is virtually normal. Yet again, since healthcare costs vary widely, first check your local prices to get an idea. Inflation protection is another important thing to look for. Long term care experts suggest buying policies with benefits that grow 5% a year to keep with the pace of medical inflation.Care for a little flexibility
Three years is the most popular long term care benefit period. As a couple, it’s certain that only one of you is going to spend more in hospital time than another. Hence, you can avoid a financial catastrophe by availing a shared benefit. You can buy a total of 10 years of coverage to be split among you as needed - say, five and five, or, four and six.Shop for multiple quotes
Don’t wait too long to shop. Yet, don’t take any decision in hurry. For the same coverage, policies with reputable carriers can cost twice as much as with the less-renowned ones. Check with an experienced insurance agent in your vicinity who sells coverage for last 5 years, or ask an insurance expert here.Blog Category