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Long Term Care Insurance


Americans are living longer. A side effect of this is the need for insurance that covers the cost of long term care or LTC for short. Long term care insurance is an insurance product that is sold in the United States and the United Kingdom and helps the beneficiary provide for the long term cost of care associated with the functions of daily living. Daily living activities include dressing, bathing, eating, going to the toilet, getting in and out of bed or a chair as well as walking. Long term care insurance will hopefully allow you to remain at home to recuperate after an accident, a surgical procedure or a sudden illness. Long term care insurance provides payments for such care for a predetermined length of time. These types of charges are not normally covered by health insurance, Medicare or Medicaid. However, Medicaid does provide some medically necessary services for people with low income or limited resources who might need nursing home care but can stay at home if certain, special services are provided for them. Today, the cost of a private room in a nursing home is about $181.00 per day or approximately $66,000 per year. These costs will continue to grow and finding the money to pay for these services will present challenges for everyone. You must pay attention to details about all types of insurance products and working with an experienced broker can be a definite benefit. You must also evaluate the stability of the companies you are considering to make sure they will be able to provide the benefits you are anticipating and paying for with your hard earned dollars!

Long term care does not have to be long term in the duration of the benefits provided. A person who has purchased long term care (LTC) insurance may only need covered services for a few months to recover. Age is not a determining factor in the need for this type of insurance product. Interestingly enough, approximately 60% of individuals over the age of 65 years old will require some kind of long term care in their lifetime. About 40% of those who receive long term care benefits are between the age of 18 and 64 years old. It is important to know that a significant change in your health status could make the acquisition of this type of insurance product either impossible to obtain or extremely expensive, if you can get it at all. Considering the need for long term care insurance and evaluating your individual situation is a smart move. The cost of care continues to spiral upward and most people needing long term care would rather receive it in the privacy of their own home.

Services covered by long term care insurance are services such as home care, assisted living, adult day care, respite care, hospice care, nursing home care as well as care provide at Alzheimer's facilities. If the home care coverage is purchased, long term care insurance may cover you from the first day it is needed; it may also cover the cost of a live-in caregiver, companion, housekeeper, therapist or private duty nurse. These benefits may be provided on a 24 hour, 7 day a week basis. Selecting the appropriate plan for you is an important decision. Having the services of an experienced and licensed insurance agent will help you in the selection of the most affordable and comprehensive plan for your needs.

Many people think that Medicare, Medicaid or their health insurance will pay for the cost of long term care. Simply put, this is not the case. Here are some facts for you to consider.

  • Medicare has eligibility requirements for skilled nursing care and this benefit is only covered for a limited time period.
  • Medicaid is a welfare program and it will not cover the cost of long term care for the average American.
  • Health Insurance and medical supplemental insurances do not cover nursing home care.
  • Today most individuals and families pay for long term care from saving, assets and hard earned cash

Long term care insurance seams like a simple enough product, you pay annual premiums today for the care that you may need tomorrow. Many sources say that you should not consider long term care insurance before the age of 60, except for those people that have chronic diseases. The reality is that long term care insurance can be confusing and systematically reviewing your options can be a definite benefit to you in the long run. By contacting an insurance broker and having them present all of the options to you will provide you with the opportunity to make the decision that is best for you and your family.

Here are some interesting statistics from a Lincoln Retirement Institute Survey (6/20/2008) on Long Term Care Insurance and the people that purchase it.

  • 59% of baby boomers think others should prepare by purchasing insurance for the possibility of needing long term care, yet on 35% say they are using insurance as one of their own preparations.
  • When Baby Boomers were asked what measures they are taking to prepare themselves for the potential of long term care, 54% said they were using such unreliable measures as maintaining a healthy life style, 40% said they were investing to get the highest return possible, 39% said that they were saving additional money to cover long term care needs.
  • 94% of Baby Boomers feel that being able to afford some type of nursing care is important. They are less likely to say that this goal is as important as having enough savings and investments to last as long as they live, being able to afford adequate healthcare and making sure they do not have to rely on family members for financial assistance.
  • 80% of Baby Boomers say they know that long term care costs could significantly reduce their retirement income. Yet 73% plan to use their savings or investments to cover the costs versus insurance.

There are alternatives to long term care insurance. You may want to look into products and instruments such as accelerated death benefits or viatical settlements. All of which can assist you in you're planning for long term care needs. Again, contact a reputable insurance agent, one that you can trust and most importantly... do your research. The more you know the better prepared you will be.

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