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What 10 things do I need to know about Long Term Care Insurance?

Summary

10 Things you should know about Long Term Care insurance (LTCi)

1. Chances of needing some amount of care? 43% at age 65, 50% at age 80, and if you are a couple at age 80 – you have a 70% chance of one of you needing care.

2. LTCi needs to be looked at the way you look at Home Insurance. You pay it each year. Chances of home burning down: 1 in 1200. Chances of needing care? See #1.

3. LTCi is all about HOME care, historically 75% of benefits paid are for home care. Maybe it should be called “anti-nursing home insurance”.

4. Best time to look at LTCi? Ages 45 to 59. It is a health based product, your health allows you access to the insurance.

5. Inflation for long term care has run in excess of 5% a year for the last decade, 5% Compound Inflation is an option that must be used if you younger than 70.

6. What is the cost of LTC?

· Nursing homes today run about $6000 to $8000 a MONTH in the greater Cincinnati area.

· That is about $72,000 a year.

· But if you are age 55 today and need it at age 85, 30 years later, you could expect the cost to grow to $296,000 a year if costs are consistence with the past decade.

7. Why not invest the premium amount each year to fund the need? Return on Investment:

· If you, age 55, look at out-of-pocket costs for about 30 years vs. the projected cost of LTC – you normally would have a break even point of between 3 and 6 months.

· Meaning that you could break even if you used exactly 5(?) months of long term care.

> Require Any Less; it was a bad deal,

> Require Any More; it may be the best financial decision you ever made. AND your family can care ABOUT you and not FOR you.

8. LTCi’s big bonus can be Coordinated Care at home, an included service that provides a case worker to create a Plan of Care, monitor and modify it as time goes by. They can hire and schedule Aides and identify and select appropriate care providers. It is a plan in place rather than the yellow pages.

9. Group policies normally provide much weaker benefits than individual policies, I usually see them set up as paying 50% of your daily benefit if you are at home, where you could expect to spend 75% to 100% of your time. Group Policies provides a schedule to figure out what premiums will be in later years. While the price point now is very attractive, it will increase as time goes by. Try and find someone to tell you what the cost will be at age 75 if you take inflation protection options every 3 years!

10. My family has historically never needed this kind of care, why should I? What is different now than in your parent or grand-parent lifetimes?

· Aunt Bea was age 65 in the TV show Mayberry USA.

- Age 65 now is Tina Turner.

· Cancer killed you years ago;

- Now think of Lance Armstrong and his Tour de France.

· Today and into our future we get older and don’t die,

- But would reasonably expect to become ill and need care. Health care today keeps us ticking.

Long Term Care insurance should be looked at when you have your health.

What is the value of education?

Best to understand:

- What benefits it provides,

- What the trigger points are to receive care,