Bumped across a interesting blog post on Can I Get Rich on a Salary where G purchased a Long-Term Care Policy through work. Nothing unusual about that except G is in his thirties.
Now back in my agent days, if someone younger than 50 inquired about a Long-Term Care policy, I told them to ask me again in ten years and add an extra $50 to their retirement savings instead.
- Long term Care is still a relatively new product, (introduced in the 1980s) early pioneers in this area are experiencing issues with the real costs of Long-Term care. Purchasing a product you probably won’t need for 25-30 years is risky at best. The first company I used to write these policies though exited the business in 2004.
- I’d recommend investing money for another 10-20 years instead of paying insurance premiums.
Still, if you are in your 50s, , a Long-term Care policy is something you should consider unless you are really poor or really rich.
The first steps you should take:
- Find a good agent. Long-Term Care is something that most agents have access to, but few agents specialize in. Interview agents with expertise in the field and make them explain their process of determining need.
- Find out what Long-Term Care costs in your area. Prices swing wildly based on what part of the country you live in. Most 50 somethings have a relative in assisted care. Ask the next time you stop in.
- Determine how many years you want the benefit to continue. The longer the term, the higher the premium. How does your family age? Is there a history of illnesses in your family tree that would determine a good length of stay? If not, two or three years should be your minimum, lifetime would be ideal.
- Do you want coverage amounts to increase? Yeah, I think with inflation in the nation, that would be a good idea.
- Do you want a price guarantee on premium? Get the longest guarantee you can. Premiums on this type of product will only go up.
After doing some research and understanding the coverage, here are some things to look for when you comparison shop:
- Definition of when benefits start: There are usually two or three triggering events: bathing, eating, dressing. These vary by company, find out what events trigger the coverage and who determines when coverage should start.
- Assisted living. Get the option for at home care, an assisted living facility or hospice care.
- 5 Percent annual increase in coverage. 2-3%, probably not enough.
- A+ rated company and guaranteed renewable policy. ‘Nuff said.
- Are there any illnesses excluded on the policy? Better to find out beforehand.
Notice that price didn’t come into the discussion? Consider all these options and do some research before price shopping.