In general, it’s a good idea to buy long-term care insurance before you’re 60, for two reasons:

The younger you are, the less likely it is that you’ll be rejected when you apply for the policy. If you apply in your 50s, there’s a one in ten chance you’ll be rejected. If you apply in your 60s, the chance of rejection is two in ten. If you apply in your 70s, the chance of rejection is four in ten.

The younger you are, the lower the premium will be for a given set of benefits and features. Once the premium is set, it stays at that amount for the life of the policy, unless the claims for the group of people who have bought that type of policy require that rates for the group be raised.

Source: Insurance Information Institute, “What’s the best age to buy long-term care insurance?” http://www.iii.org website. Accessed December 2, 2015. http://www.iii.org/articles/whats-best-age-to-buy-long-term-care-insurance.html

© Copyright 2016. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.

There are various questions and issues to keep in mind when choosing a long-term care policy.

Where may care occur?

The best policies pay for care in a nursing home, assisted living facility, or at home. Benefits are typically expressed in daily amounts, with a lifetime maximum. Some policies pay half as much per day for at-home care as for nursing home care. Others pay the same amount, or have a “pool of benefits” that can be used as needed.

Under what conditions will the policy begin paying benefits?

The policy should state the various conditions that must be met.

• The inability to perform two or three specific “activities of daily living” without help. These include bathing, dressing, eating, toileting and “transferring” or being able to move from place to place or between a bed and a chair.
• Cognitive impairment. Most policies cover stroke and Alzheimer’s and Parkinson’s disease, but other forms of mental incapacity may be excluded.
• Medical necessity, or certification by a doctor that long-term care is necessary.

 What events must occur before the policy begins paying benefits? 

• Some older policies require a hospital stay of at least three days before benefits can be paid. This requirement is very restrictive; you should avoid it.
• Most policies have a “waiting period” or “elimination” period. This is a period that begins when you first need long-term care and lasts as long as the policy provides. During the waiting period, the policy will not pay benefits. If you recover before the waiting period ends, the policy doesn’t pay for expenses you incur during the waiting period. The policy pays only for expenses that occur after the waiting period is over, if you continue to need care. In general, the longer the waiting period, the lower the premium for the long-term care policy.

 How long will benefits last? 

A benefit period may range from two years to lifetime. You can keep premiums down by electing coverage for three to four years—longer than the average nursing home stay—instead of lifetime.

Indemnity vs. Reimbursement

Most long-term care policies pay on a reimbursement (or expense-incurred) basis, up to the policy limits. In other words, if you have a $150 per day benefit but spend only $130 per day for a home long-term care provider, the policy will pay only $130. The “extra” $20 each day will, in some policies, go into a “pool” of unused funds that can be used to extend the length of time for which the policy will pay benefits. Other policies pay on an indemnity basis. Using the same example as above, an indemnity policy would pay $150 per day as long as the insured needs and receives long-term care services, regardless of the actual outlay.

Inflation protection

Inflation protection is an important feature, especially if you are under 65, when you buy benefits that you may not use for 20 years or more. A good inflation provision compounds benefits at 5 percent a year. Without inflation protection, even 3 percent annual inflation will, over 24 years, reduce the purchasing power of a $150 daily benefit to the equivalent of $75.

Six other important policy provisions

1. 1=7 Elimination period. Under some policies, if the insured has qualifying long-term care expenses on one day during a seven-day period, he or she will be credited with having satisfied seven days toward the elimination period. This type of provision reflects the way home care is often delivered—some days by professionals and some days by family members.
2. Guaranteed renewable policies must be renewed by the insurance company, although premiums can go up if they are increased for an entire class of policyholders.
3. Waiver of premium, so that no further premiums are due once you start to receive benefits.
4. Third-party notification, so that a relative, friend or professional adviser will be notified if you forget to pay a premium.
5. Nonforfeiture benefits keep a lesser amount of insurance in force if you let the policy lapse. This provision is required by some states.
6. Restoration of benefits, which ensures that maximum benefits are put back in place if you receive benefits for a time, then recover and go for a specified period (typically six months) without receiving benefits.

For more information on long-term care insurance, you can access the Life and Health Foundation for Education OR America’s Health Insurance Plans.

Source: Insurance Information Institute, “What features of long-term care policies should I focus on?” http://www.iii.org website. Accessed December 2, 2015. http://www.iii.org/articles/what-features-of-long-term-care-policies-should-i-focus-on.html

© Copyright 2016. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.

The tips below will help you save money wisely, but don’t rely on price alone.

MOST IMPORTANT: Because you may not collect for decades to come, be sure to buy from a company that has been around for some time and is financially stable. You may want to look up, from an independent rating agency, the financial strength ratings of a company you’re considering.

GENERAL GUIDELINE: Keep the premium for your long-term care insurance policy to 7 percent of your income, or less. For example, if your monthly income is $4,000, the long-term care insurance premium should not be more than $280 per month. (This is what the National Association of Insurance Commissioners recommends in its Model Regulation for Long-Term Care Insurance.) Another expert advises that the income to use in this calculation isn’t your current income, but your expected income in retirement, since that’s the income from which you’ll be paying premiums for most of the policy’s existence.

Other ways of saving:

1. Find out if long-term care benefits are available through a group policy from your employer. Employers might subsidize the cost, lowering what you must pay.
2. Check whether you can add long-term care benefits as a rider on an existing life insurance or annuity policy. These “combination” arrangements can save because the insurance company gains operational savings that it can pass along to you.
3. Buy a policy with the longest waiting period you can afford. For example, choosing a 90-day period instead of a 30-day period can cut the premium by 30%. However, if you do need long-term care services, you should save some money to pay these costs until the waiting period ends.
4. If both spouses of a married couple are considering buying long-term care policies, look into buying one joint policy for both of you. Such a policy pays when either one needs care and can pay for both, if necessary, up to its benefit limits.
5. If you’re still looking to trim the premium further, consider buying a policy that will pay most, but not all, of the average nursing home costs in your area. For example, if a nursing home room now costs $120 per day, buy a policy that pays $100 per day. However, be sure to buy an inflation-protection provision.
6. Check with several companies and agents, comparing both benefits and costs. As with other types of insurance (and many other purchases), comparison shopping can save you money. Just be sure you’re comparing policies with similar provisions and companies with comparable financial strength and service records.

Source: Insurance Information Institute, “How can I save on long-term care insurance?” http://www.iii.org website. Accessed December 2, 2015. http://www.iii.org/articles/how-can-i-save-on-long-term-care-insurance.html

© Copyright 2016. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.

Dear Valued Customer,

This issue of the “————” is focused on answering a number of important questions about long-term care:

• What is the best age to buy long-term care insurance?
• What features of long-term care policies should I focus on?
• How can I save on long-term care insurance?

Read on to find out why it’s a good idea to buy long-term care insurance before you hit sixty. Understand the various policies available and which one may be the right choice for you or a loved one. In addition, get some tips on how you can save money wisely.

Please contact us for more information. We have knowledgeable people on our staff who understand long-term care insurance. We appreciate your continued business and look forward to serving you.

Kind regards,