Is Long-Term Care Insurance Right for You?

Clients sometimes ask me about purchasing long-term care insurance. It’s not my call but here’s what I tell them.

According to the National Association of Insurance Commissioners you should NOT buy long-term care insurance if:

You can’t afford the premiums.
You don’t have many assets.
Your only source of income is Social Security benefit or Supplemental Security Income (SSI).
You often have trouble paying for utilities, food, medicine, or other important needs.
You’re on Medicaid

According to the same association you SHOULD consider buying long-term care insurance if:

You have many assets and/or a good income.
You don’t want to use most or all of your assets and income to pay for long-term care.
You can pay the insurance premiums, including possible premium increases, without a problem.
You don’t want to depend on support from others.
You want to be able to choose where you receive care.

Here are some shopping tips to keep in mind:

Ask questions.
Check with several companies and agents.
Check out the companies’ premium increase histories.
Take your time and compare outlines of coverages.
Understand the policies.
Don’t be misled by advertising.
Be sure you put correct and complete information on the application.
Never pay in cash.
Get the name, address and phone number of whom you have talked to.
If you don’t get the policy within 60 days, call the agent or company.
Look at your policy during the free-look back.
Make sure the policy gives you the coverage you want.
Consider automatic withdrawal of the premium.
Check the financial stability of the insurance company.

What is the cost? The companies are going to look at your age, health, and the amount of coverage you desire. The cost of long-term care is a moving target. It changes over time. So how do you insure a moving target? Is probably the main reason a lot of insurance companies have withdrawn from this market.

What type of coverage do you want? A set amount for each month for a number of years? Lifetime coverage? Do you want an inflation rider on the policy? Maybe you want to purchase a pool of money that would pay not only for long-term care but for in-home care or assisted living.

This is a difficult market. Last year I had a husband and wife come to see me and they had recently purchased this type of coverage. At the end of the first year the policy, the company increased their premiums 40%!

So be careful out there. Mike

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