Long Term Care

While most people rely on Medicare in their later years, one thing that is not covered is long term care.

With long term care riders, you can use a portion of the life insurance benefit for long term care, if needed. If you don’t use the rider, the entire benefit will be paid upon death.

One of the greatest developments is the availability of life insurance with a long-term care component, also known as a rider. This is much better than the “use it or lose it” quality of prior long term care plans. No matter what, you can get the benefits you pay for.

 

When is the best time to buy long term care insurance?

It is possible to self-insure for long term care, however it will carry a hefty price tag. The national median cost for a nursing home bed in 2019 was $280 a day or $102,200 per year. A stay in an assisted living facility will run you upwards of $48,612 annually. You can have money set aside in investments, however, if you enter a nursing home during a down market, the nursing home will not wait for the market to go up for payment. Long term care insurance is an affordable way to make sure you are covered no matter what the market is doing.

Do I really need long term care insurance?

It is possible to self-insure for long term care, however it will carry a hefty price tag. The national median cost for a nursing home bed in 2019 was $280 a day or $102,200 per year. A stay in an assisted living facility will run you upwards of $48,612 annually. You can have money set aside in investments, however, if you enter a nursing home during a down market, the nursing home will not wait for the market to go up for payment. Long term care insurance is an affordable way to make sure you are covered no matter what the market is doing.

How much long-term care insurance should I buy?

The cost for long term care increases every year. It also varies widely by location. For example, the nursing home costs in California will be much different than those in Tennessee.

When determining how much coverage you will need, you will need to consider:

  • How long will you need your benefits to last? (It is rare to need coverage more than 5 years.)
  • How much is the average daily rate for long term care in your area?
  • How much income will be coming in each month? (From social security, pensions, etc.)

The best way to calculate is the take the average daily rate in your area and multiply that by 365. Multiply that number by the number of years you want your benefits to last (5 maximum). Subtract your yearly income from that number, and that will give you a good base.

Many long-term care plans will include increases in benefits for inflation, so be sure to look for those provisions in your policy.

Does regular health insurance or Medicare cover long term care?

No, regular health insurance or Medicare does not cover long term care. You will be responsible for all bills, unless you have an insurance policy that specifically covers long term care.

Can I pay for a long-term care insurance policy in full?

Yes. It is a great strategy to take a small portion of your nest-egg to purchase a policy in full that will cover long-term care. The money put into these policies is liquid, can be withdrawn at any time, and grows as an investment. To learn more about these types of policies, reach out to us for more information.