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Protection From the Perils of Aging

Okay. So say you’ve decided to purchase a long-term care policy. When should you do it? Experts caution that these policies do not need to be purchased until consumers are 65 years old. However, it is important to be in good health when you apply. One in four applications for long-term care insurance is turned down. Only if you have a chronic disease or there is a history of serious illness in your family should purchasing earlier than age 65 be considered. Waiting until after 65 is also not wise, since it will be harder to pass the medical tests and premiums will be higher. Salespeople will try to convince you to buy when you’re young, but realize that significant commissions ride on this for them. The fact is that less than one percent of people under 65 need nursing home care. These numbers grow to four percent for those 65-74 and 19 percent for those 85 and older.
Use the following guidelines to help make the decision to purchase long-term care insurance coverage solid:

Choose an insurer who is stable and solid. Since you’re purchasing coverage that you may not use for some time, research the company with AMBest, Standard & Poor’s, Moody’s or the Weiss Ratings Database. Look for companies rated in the top two financial strength categories by at least two of the ratings services.

Seek out a policy that offers flexibility in the application of benefits. While you can choose the amount of the daily benefit (from $100 to $250 a day currently), understand that the premium will go up accordingly based on your decision. The daily benefit should make up the difference between your income and the cost of nursing home care in your area. Choosing to protect your policy against inflation will also increase premiums but will shelter you in the long run. (Note: The inflation option is a choice that is made at application; choosing “yes” increases the dollar value of your policy by five percent each policy year to keep pace with estimated inflation in the cost of long-term care.)

Read the policy carefully to find out what’s covered. Is skilled nursing care covered? Home health aides? Custodial care? Are particular conditions with which you may suffer covered, for example Alzheimer’s and Parkinson’s?

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