|
If you
need in-home care or to live in an assisted living or nursing facility for an
extended period, long-term care insurance can provide peace of mind. However,
long-term care insurance can be too expensive or the benefits too limited to
justify the cost. The National Association of Insurance Commissioners (NAIC)
has these tips to help you better understand this complicated insurance
product.
What is
long-term care insurance?
Long-term care insurance provides
in-home or in-facility care for people with chronic illnesses, disabilities
or other conditions requiring ongoing care over an extended period. The range
of care can be great, from helping bathe, dress and eat to skilled care
provided by nurses or therapists. Someone with a prolonged physical illness,
a disability or a cognitive impairment such as Alzheimer's disease often
benefits from long-term care.
But I
already have health insurance
Traditional health insurance policies
do not pay for this type of daily or extended care. Medicare may pay for a
limited stay in a nursing home, but only under specific circumstances.
Medicaid may cover qualified individuals.
Long-term
care insurance can be costly
The cost of long-term care
services depends on the amount and type of care you need and where you get
it. This type of care can be expensive, so do your research. Investigate
costs in your region for care in a nursing home, an assisted living facility
and your own home. Consider these figures as you look at policy premiums.
Shop
Around
Once you have an idea of the cost
of care near you, contact several companies and agents for quotes. Be sure to
compare benefits, the types of facilities covered, limits on your coverage
and the premium cost. Ask about potential rate increases and the rate
increase history for the company. Only buy insurance from a reputable agent
or company licensed to sell insurance in your state.
You may have a choice between a
federally "tax-qualified" long-term care insurance policy and one
that is not. A tax-qualified policy may allow you to deduct part or all of
the premium you pay from your federal taxes. Consult your tax professional to
determine if a specific policy offers tax advantages.
A growing number of life insurance
policies and annuity contracts now either include a built-in long-term care
benefit or offer an add-on to your policy that pays for long-term care
expenses. Check with your financial planner to see if this type of policy
makes sense as part of your financial plan.
Deciding
whether to buy
Whether you should buy a long-term
care insurance policy will depend on your age, health status, overall
retirement goals, income and assets. Premiums are expensive. If you are on a
fixed income, you should think carefully before purchasing such an expensive
product. On the other hand, if you have means to pay premiums and assets you
wish to protect, a long-term care insurance policy may be for you.
More information
For more in-depth information, visit the
NAIC's Insure U consumer resource and check out a detailed long-term care shopping guide. |