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    A nurse assisting an elderly patient at a long-term care facility

    Is Long-Term Care Insurance Worth It? [What to Know]

    5 mins

    As people age, they start thinking about planning for the future and the care they may need. For many, making it well into their golden years means they begin to develop issues with day-to-day activities like eating, dressing, and bathing. As a precaution, some people choose to purchase long-term care insurance. But is long-term care insurance worth it? Let’s take a closer look.

    What Is Long-Term Care Insurance?

    Long-term care insurance is a type of insurance that helps policyholders cover the cost of care that isn’t covered by health insurance or disability policies. This type of care might include adult day care, in-home health aide services, assisted living facilities, and nursing homes.

    Example: Let’s say you need a hip replacement when you’re 75. Because of your age and the nature of your surgery, your doctor thinks you’ll need help doing daily activities at home indefinitely. In this case, your health insurance would pay for the hip replacement, but your long-term care insurance would pay for a home health aide to help you.

    It’s not a foregone conclusion that you’ll need long-term care at some point, but it’s very likely. Of Americans who live to be 65 or older, almost 70% require some type of long-term care. 

    What Does Long-Term Care Insurance Cover?

    Most people have at least heard of long-term care insurance, but not everyone knows what exactly it covers. Generally speaking, long-term care policies will help you pay for services that assist with activities of daily living (ADLs). ADLs are simple, everyday actions, such as:

    • Bathing

    • Getting into bed and out of bed

    • Eating

    • Using the bathroom

    • Getting dressed

    If you need help with these kinds of tasks, you probably need help with more complex tasks. That’s why some long-term care policies cover what are known as instrumental activities of daily living (IADLs):

    • Shopping for groceries

    • Answering the phone and making calls

    • Planning and preparing meals

    • Managing your medication (including taking medications as prescribed and refilling them when necessary)

    • Managing your money

    • Cleaning your living space

    • Getting where you need to go (driving, taking public transportation, walking, etc.)

    Different people need varying degrees of help with these tasks, so long-term care usually covers types of care from visiting health aides to full-time residential care.

    It’s important to note that long-term care policies generally do not cover additional medication. For example, your long-term care policy might pay for the services of a home health aide who can help you take your medication, but it probably won’t cover the medication itself — that’s an expense your health insurance would cover.

    That said, some policies do extend beyond the basic ADLs and IADLs. You may be able to purchase a policy that covers the following:

    • Skilled nursing care in your home

    • Hospice care

    • Speech therapy

    • Occupational therapy

    • Physical therapy

    • Various kinds of rehabilitation

    As you can imagine, long-term care policies vary significantly in what they cover. Before selecting a policy, ensure you fully understand what’s covered and what isn’t.

    How Does Long-Term Care Insurance Work?

    As with any other insurance policy, you pay monthly premiums for your long-term care insurance. If something happens and you need long-term care, you file a claim. Assuming that claim is approved, your policy would cover the cost of a home health aide, an assisted living facility, etc.

    How the payout works depends on the type of policy you have. There are two main types of long-term care policies:

    Standalone Policy (or Traditional Policy)

    With this policy, you pay a monthly premium that might increase over time. After a waiting period, a standalone policy will pay a maximum amount per day for care. There’s also a lifetime payout maximum.

    This kind of policy is a great way to guarantee you have a way to pay for long-term care. However, if you never end up needing long-term care, you don’t have a way to recoup your investment.

    Hybrid Life/Long-Term Care Policy

    Premiums for this kind of policy tend to be higher but don’t increase over time. When you have a hybrid policy and don’t need long-term care, your beneficiaries benefit from your investment.

    This policy effectively lumps together long-term care and life insurance. Each policy guarantees your beneficiaries a certain life insurance payout when you pass away. However, you can also access a portion of the funds to pay for long-term care. If you don’t need any kind of long-term care, your beneficiaries get a higher death benefit.

    Is Long-Term Care Insurance Worth It?

    Not everyone needs to purchase long-term care insurance, but everyone needs a plan for long-term care. There are a couple of instances where you might not need long-term care insurance:

    • If You Qualify for Medicaid: If your income is low enough, you might be eligible for government-subsidized long-term care

    • If You Have the Means to Cover Care: If you have savings, investments, or other assets that can cover long-term care, you might not need a long-term care insurance policy

    Some people choose to make no plans for long-term care, thinking their children or other family members can care for them. However, there is no guarantee that your family members will be willing and able to care for you, and it is vital to have a plan in case things do not go as expected.

    How Do You Buy Long-Term Care Insurance? How Much Does It Cost?

    The cost of insurance depends on how much coverage you want. But on average, a 60-year-old woman with a $165,000 policy pays $1,960 monthly. A 60-year-old man would pay $1,200 for the same policy — that’s because women tend to live longer and file more claims.

    It’s usually best to buy long-term care insurance in your early to mid-50s. Because there’s so much variation in policies, purchasing your policy through an insurance agent or broker is a good idea.

    Prepare for the Future and Enjoy Peace of Mind

    In a perfect world, you’d be able to grow old without the need for any kind of long-term care. But because there’s (unfortunately) no way to predict the future, the right long-term care policy can give you and your loved ones peace of mind you can’t get anywhere else.

    Ryan Hong
    Ryan Hong
    Senior Consultant, Team Lead at Bennie
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