Your insurance agent will be able to explain the different types of long-term care or LTC insurance for you. Select insurance companies offer this kind of insurance coverage for individuals. If you work for the federal government, you may obtain LTC insurance through the federal FLTCIP program. Regardless of how you buy them, there are a variety of options that will depend upon your individual situation.
Some policies may pay for care not only in a nursing home but also in an assisted living facility or at the home of the person who requires care.
Policies may also include cost-of-living adjustments, which will increase future benefit payments.
Some companies also offer LTC policies that cover both spouses at a discounted rate, rather than having to purchase two separate policies.
Fed Week’s recent article, “Selecting among Long-Term Care Options to Hold Down Costs,” explains that there also are life insurance policies that double as LTC insurance.
Therefore, if these policies cover long-term care expenses; the policy’s death benefit will be reduced.
However, if long-term care is not needed, the insured individual’s beneficiary eventually can receive the full death benefit.
Remember also that the ongoing premiums will be lower, compared with policies bought when a person is older.
When you’re shopping for LTC insurance, there are some tactics that can reduce your policy cost. Here are just a few:
- Reduce benefits. A policy that pays benefits as long as you need long-term care can be very expensive. However, a policy with a five-year maximum payout will be less expensive. There are not many people who will need more than five years of long-term care.
- Wait longer. You can reduce costs, by extending the period before you collect benefits. A policy with a 90-day waiting period will be less expensive than an LTC policy with a 20-day wait. Of course, this is only a bargain, if you can afford to pay for 90 days from your own resources.
- Look out for automatic inflation increases. If you are working to keep costs down, consider a “future purchase option” that will let you buy more coverage, if you need it, even if you have faced health issues. Your alternative is a policy that increases your benefit annually from $100 a day to $105—$110, etc. This becomes very costly, very quickly.
Reference: Fed Week (June 27, 2019) “Selecting among Long-Term Care Options to Hold Down Costs”