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Long-Term Care

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Making Sense of Long Term Care Insurance
By Cheryl Smith, MA

(Page 2 of 3)

Options in LTCi

According to financial planners, people should start to think about purchasing a LTCi policy when they reach their late 50s. Although a few employers offer LTCi policies as an optional benefit, in most cases LTCi is a policy youíll need to purchase from an outside company.

Several factors will influence the cost, but the average annual figure for LTCi is about $1,900.

The premium will depend on:

  • how long you pay out-of-pocket until the policy
  • kicks in (often 90 days)
  • age and current health situation
  • the amount of coverage you can afford and how
  • much youíll need to cover the average costs of
  • care in your area

Before purchasing a policy, it is important to find a financial planner or insurance agency that specializes in long-term care planning and talk to them about the options.

Some things to consider:

First decide if LTCi makes sense given your current situation. If you have a large amount in assets, youíll probably want to purchase a policy to protect your assets. However, if you canít afford the premiums without changing your current lifestyle, then it might not make the most sense for you.

Make sure that the policy you choose does not have a hospitalization requirement prior to service kicking in. If it does, you might save on premium costs but could end up paying a steep bill before you can access the benefit.

Make sure the policy you choose takes inflation into account. Youíll want a policy that has a compound inflation protection benefit increase (usually around 5 percent) to cover rising prices.

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