Is Long-Term Care Coverage Right for You?

Over the next several decades, the population of U.S. seniors - people aged 65 and older - is expected to grow rapidly, from an estimated 54 million in 2019 to 81 million in 2040 and 95 million by 2060, according to the Congressional Budget Office.

That surge is expected to produce an increase in demand for long-term care (LTC) services — the personal assistance that enables people who are physically impaired to perform daily routines such as eating, bathing and dressing.

While Medicaid covers a portion of LTC costs, you may have to exhaust a significant portion of your assets in order to qualify for those benefits due to strict financial eligibility guidelines.

The national average cost of a shared room in a nursing home in 2021 was $260 a day, or $94,900 a year, according to the American Council on Aging. Those prices rise every year and as the demand increases and supply remains stagnant, you can expect those costs to go up with each passing year.

If the numbers seem daunting, there is a product that can help: long-term care insurance.
 
How LTC insurance works
In general, an LTC insurance policy works by paying a selected dollar amount per day for the type of long-term care outlined in the policy. The most common method insurance companies determine when benefits should be paid, is based on your inability to perform certain "activities of daily living" (ADLs), such as:

• Eating,
• Bathing,
• Transferring in and out of bed, and
• Dressing.

 
Usually, benefits are payable when you are unable to perform a specified number of ADLs. However, some policies will only pay benefits when your doctor certifies that the care is medically necessary.

Some life insurance policies offer LTC coverage as an option. For instance, the policies would contain a rider that allows the policy cash value or a portion of the death benefit to be used to fund LTC expenses.

In those cases, a portion of the death benefit would typically be paid on a periodic basis after the insured qualifies. However, money received under this option will usually reduce the amount of death benefit the beneficiary will eventually receive.
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LTC insurance is not for everyone; the choice to obtain it or not can depend on your age and financial circumstances. Generally, if you meet the following requirements, you should consider a LTC policy:

• You are in the age range of 40 to 84.
• You have significant assets to protect.
• You can afford to pay premiums now and in the future.
• You are in good health, and are insurable.

 
Since there are many LTC options available, it is best to call us first for help in determining whether this coverage is right for you.