Premium rates for long-term care insurance have a reputation for being "high" and may be unaffordable to some people. This is usually due to the fact that people postpone investigating coverage until they are too old to receive a reasonable premium rate.
The younger you are when you purchase LTC insurance, the lower your premium will be for the life of the policy. For every year you wait to purchase coverage, your premium will be 8-15% higher. But this percentage does not include the fact that there is an overall upward trend in premium rates in the industry as a whole. When you take this upward trend into consideration, for every year a person waits they will pay an additional 14% to 22% in premium.
This means that if a 55 year old today waits until they are 60 to purchase long-term care insurance, their premium will be at least 50% higher!
Long-Term Care is NOT the same as Nursing Home Care!
Most people mistakenly view "long-term care" as synonymous with "nursing home care." The reality is that a person's care normally progresses through a continuum of care that may never require nursing home confinement.
For example, older people experiencing the frailties of aging may first require only a minimal amount of assistance in their home for a few hours each week. If the condition worsens and they experience problems with maintaining their balance, taking medications, or loss of memory, a move to an assisted living community may be the next step on the continuum of care.
Unless the condition worsens, or a terminal illness develops, the need for more comprehensive care in a nursing home will probably never be required. This trend toward helping people avoid nursing home care and receive care in a more comfortable setting is a bright spot in the generally somber subject of long-term care.
For example, older people experiencing the frailties of aging may first require only a minimal amount of assistance in their home for a few hours each week. If the condition worsens and they experience problems with maintaining their balance, taking medications, or loss of memory, a move to an assisted living community may be the next step on the continuum of care.
Unless the condition worsens, or a terminal illness develops, the need for more comprehensive care in a nursing home will probably never be required. This trend toward helping people avoid nursing home care and receive care in a more comfortable setting is a bright spot in the generally somber subject of long-term care.
Why Does It Seem Like So Many People Need Long-Term Care Compared to Earlier Decades?
The fact is, the number of people needing long-term care IS growing, and will continue to grow over the next three decades. Why? There are 3 major trends that are having a phenomenal impact on long-term care. The first trend, and the one with the biggest impact, is the "Aging of America." Driven by the baby boomers, this trend has had a significant impact on society at every social and economic level.
The second trend is related to the recent advances in medical science and the emphasis on healthy living. Both of these factors have a positive effect on longevity. But unfortunately, our bodies and minds will still eventually wear out, only at a much slower pace. Ironically, many health conscious people will need care for the last two decades or more of their lives.
The third trend is the change in the family structure. Family's are more mobile and geographically separated than in years past. Add to that the growing number of women in the workforce, and it's easy to see why PAID caregivers are becoming more in demand.
The evidence is there- there's good chance you or someone you love will need long-term care in the future. Do you have a plan?
The second trend is related to the recent advances in medical science and the emphasis on healthy living. Both of these factors have a positive effect on longevity. But unfortunately, our bodies and minds will still eventually wear out, only at a much slower pace. Ironically, many health conscious people will need care for the last two decades or more of their lives.
The third trend is the change in the family structure. Family's are more mobile and geographically separated than in years past. Add to that the growing number of women in the workforce, and it's easy to see why PAID caregivers are becoming more in demand.
The evidence is there- there's good chance you or someone you love will need long-term care in the future. Do you have a plan?
Getting Old- It Happens to All of Us!
The years pass by quickly. Plan ahead for Long-Term Care BEFORE you need it!
Don't Purchase Long-Term Care Insurance Without Inflation Protection!
The demand for long-term care services - due to baby boomers moving into their 70's and 80's - will undoubtedly result in higher long-term costs in the future. An inflation protection benefit added to your LTC insurance coverage will help hedge against these rising costs.
While it is possible to purchase LTC insurance without it, we stongly recommend that some type of protection be included in the design of every LTC insurance plan. Inflation will always be with us, with a high probability that the inflation rate for long-term care services will be higher over time than the overall economic inflation rate.
The inflation protection benefit automatically raises the benefit amount of your policy each year. Without having to think about it, or pay an increasingly higher premium each year, the benefit helps to ensure that the original objectives of your LTC Plan continue to be met.
These benefits normally offer a 5% simple or 5% compound inflation benefit. While the compound benefit is more expensive, it's normally the best choice since it is more realistically tied to probable inflation rates. The compound inflation benefit will double the benefits of your policy every 14 years. If you purchase the simple inflation benefit, the benefits will double every 20 years.
Specifically, we recommend the following:
Even with the purchase of the inflation protection benefit, it's imperative to monitor the rising cost of care in your area to make sure your plan is meeting your objectives. An annual review of coverage by your LTC Planning and Insurance expert should include a comparison of the new current costs of care with your latest inflation-adjusted benefits.
· Everyone who purchases coverage at age 70 and under should purchase the compound inflation benefit.
· If you are purchasing coverage between ages 71 and 75, ad the compound benefit adds too much to the premium, consider the simple inflation rider.
· If you are purchasing coverage after age 75, and both the compound and the simple inflation protection benefit riders are too expensive, consider increasing your benefit amount to act as a cushion against inflation. It may be more practical at these ages to purchase an additional 25% in benefit amount, for example, rather than an actual inflation protection benefit. The additional coverage acts as your protection against inflation.
Your LTC Planning and Insurance expert can guide you in this decision.
Email me at allen@superiorltc.com if you would like a complimentary e-book version.
Why Long-Term Care is a Practical Solution for 2nd Marriages
Since the number of second marriages is growing at a faster pace than ever, the need for long-term care by one partner could cause problems among children of both spouses. The likelihood is high that the older partner will need long-term care services for several years because it's common for one partner in second marriages to be considerably younger than the other.
Children born of the previous marriage(s) of the younger spouse may be apprehensive that their parent's health could be affected by providing care for an older spouse, or that an inheritance will be depleted paying for care for the older step-parent.
There are also misconceptions surrounding the Medicaid (Welfare) program. Medicaid is a needs-based program and eligibility is determined by an evaluation of a person's assets and income. Many second-marriage couples believe that if they have a pre-nuptial agreement separating their funds, they will not have to "spend down" their combined assets before qualifying for welfare. In fact, pre-nuptial agreements do not protect a couple's assets from Medicaid's spend down requirements.
Planning ahead with long-term care insurance for both partners of a second marriage can alleviate many of these concerns. Insurance can assure that neither spouse will be required to provide care personally and that assets will not be depleted paying for the partner's care. This allows both partners to protect their mental and physical health, and to pass their assets down to their own bloodline.
In addition to protecting their children's inheritance, there are other benefits to having LTC insurance coverage:
* Better access to high-quality and affordable care
* Ability to maintain current living arrangements
* Prevent dependence on family members for care
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