Considering Long-term Care Insurance? Here's What You Need to Know
Long-term care insurance may become a financial lifeboat in your later years or in case you suffer a debilitating injury.
Long-term care insurance (LTC) is health insurance specifically designed to provide care for people living with an injury or chronic illness. It offers both medical and non-medical assistance to the insured, whether in their own home or in a care facility, group home, or nursing home. It provides them with everyday care help.
You may never need this type of insurance, but if you develop an illness or a disabling injury physically impairs you, it may result in long-term effects that prevent you from undertaking everyday tasks or activities of daily living without assistance, such as dressing, bathing, or using the bathroom. Sometimes, it can be burdensome or simply impossible for family members to provide someone with these needs the proper level of care on a long-term basis. That's why LTC is so important.
How to Buy Long-term Care Insurance
You can buy a group policy or an individual policy through an employer or membership in an association. A few companies also provide life insurance policies or even annuities with long-term care insurance as a rider.
Who Qualifies for Long-term Care Insurance?
There is no age requirement for LTC insurance. Insurance companies may suggest an individual buy a policy at an early age, say 40, as opposed to Consumer Reports, which recommends waiting until you reach 60 years old. Keep in mind though that waiting too long may result in prohibitively costly premiums. The best time to the start planning for long-term care insurance is now (see also The Perfect Age to Get Life Insurance for a related topic).
Marital status may not affect eligibility, but it can affect premiums. In addition, applicants for LTC insurance must be in good health. Older people will likely be disadvantaged if they already need long term care or even require help with everyday activities or suffer from conditions, such as Alzheimer's , AIDS, MS, Parkinson’s, dementia, stroke, metastatic cancer, or a progressive neurological condition. It is advisable to ask your agent specific questions as different policies cover different services.
Long-term care services insurance covers include:
- Nursing home care,
- Adult day service,
- Assisted living care,
- Home healthcare services, which should include professional nursing care as well as physical therapy, and
- Personal care at home, which can include some homemaker services, such as housekeeping or running errands.
Additional services some policies may provide include respite care, hospice care, care after a hospital stay, or caregiver training for family members.
Services Not Covered
Some coverage exclusions in long-term care insurance include:
- Pre-existing conditions: Disability or an illness for which you get medical health advice or treatment 6 months before applying for LTC coverage may not be included until 6 months after the policy's effective date.
- Care by family members: Some policies do not pay family members to take care of you, while others pay to train them to be caregivers.
- Mental health and nervous disorders: LTC policies cover Alzheimer's as well as other age-related disorders. Even so, an insurance company can deny coverage to an individual already affected by Alzheimer's. Moreover, some nervous disorders or mental health issues may not be covered.
- Other exclusions: LTC policies in Texas may not include coverage for some conditions as a result of certain activities, such as drug and alcohol use, commission of a felony, injury or illness as a result of an attempted suicide, an act of war, or, worse still, deliberately self-inflicted injuries.
Read and understand the policy thoroughly before you buy. You can also hire someone who can help you make an informed decision. However, if you do not want legal advice, deal only with an established and respected insurance brokerage firm that has shown itself to be reliable in the community for many years. The benefit of working with an insurance broker is that they are an independent agent for several insurance providers and they will be in a position to provide you with details of the different policies out there (learn more in What Is an Insurance Broker?).