Long-Term-Care Insurance
What is long-term-care insurance?
Long-term-care insurance is an insurance policy that you buy in the event you
ever need some type of long-term care and/or assistance with activities of daily
living.
Some examples of the types of care that might be covered under such a policy
are:
- Personal care in the home
- Home-healthcare service
- Assisted living
- Adult day care
- Nursing-home care
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Why should I buy long-term-care insurance?
Some statistics show that about 60 percent of Americans may need long-term care at
some point in their lives. To help put this into perspective, consider the following:
- Your risk of a major fire in your home is 1 in 1,200.
- Your risk of a major auto accident is 1 in 50%.
- Your risk of spending more than $30,000 in a hospital is 1 in 15.
Most people carry insurance policies to cover expenses associated with home
fires, automobile accidents and hospitalization. Yet, many people never consider
buying insurance to help pay for the costs of long-term care. This is so in
spite of the fact that, at age 65, the risk of needing long-term care that could
cost tens of thousands of dollars a year is almost 1 in 2. At age 75, the risk
is even higher.
According to a 2002 survey of nursing-home and home-care costs, the average
yearly cost of a nursing home is $52,195 for a semi-private room, and residence
at an assisted-living facility averages $25,908. Home-care expenses can range
from $90 to $150 a day. The effects of inflation over the next 20 years could
triple these costs.
According to the U.S. Health Care Financing Administration, nearly one-third
of all bills for long-term care are paid by individuals and families out of
their own pocket. As a result, 70% of single people and 50% of married couples
who require long-term care become impoverished within one year.
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When should I buy long-term-care insurance?
You can actually purchase long-term-care insurance at any age after 18. Though
the average age of a person buying long-term-care insurance is 68, monthly premiums
are based on how old you are at the time of application, so the sooner you apply,
the less expensive premiums will be. Once you're approved, your rate should
not increase as you get older. Eligibility for long-term-care insurance is based
on your health at the time of application, so applying when you are still healthy
is critical. Sadly, one in four applicants is turned down for health problems.
NOTE: A diagnosis of Alzheimer's disease will trigger an automatic denial
of long-term-care insurance.
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Can life insurance help pay for long-term care?
Click here
for more information about how life insurance policies might be
used to help pay for long-term care.
Keep in mind that premium costs may increase in the future. ^ Back to Top
Where can I buy long-term-care insurance?
A financial planning advisor or independent insurance broker can
help you sort through the various policies available to you and
help you find one that suits your needs. The National Association
of Insurance Commissioners offers a "Shopper's Guide to Long-Term-Care
Insurance" that can help you sort through the options; it can
be obtained by calling the organization at 1-816-783-8300, or visiting
www.naic.org.
Federal employees and their spouses are eligible for coverage under the Federal
Long-Term-Care Insurance Program. For more information, call 1-800-582-3337
(1-800- 843-3557 for TDD/hearing-impaired), or visit www.ltcfeds.com.
Also see "What
should I look for in a long-term-care insurance policy?"
and "Facts
to consider before applying for long-term-care insurance."
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