Let’s face it, you can insure just about anything these days. There is insurance for just about everything. You could even find yourself in a situation where you had so much insurance coverage that you are barely able to make the premium payments.
The best case scenario is to have insurance and never need it. However, when tragedy does strike, you are thankful for every premium payment that was made. I had a first-hand experience with long-term care coverage for my mom. My mom, who has Alzheimer’s, spent about a year and a half in a nursing home prior to her death. Fortunately, the long-term care insurance paid for everything.
With or without my personal experience, I have always though that long-term care insurance should be a part of a person’s retirement plan.
You have to address the question – How will you pay for a long-term illness that requires a nursing home stay? Do you have enough money in investments or in monthly pension benefits to cover $ 4,500 to $ 5,000 a month in nursing home expenses? Do you really want to push that burden on your family? These are some tough and important questions.
So, here are some things to consider when evaluating long-term care insurance:
Can you self-insure? I have some clients who have plenty of income each month from social security and pension plans, so that if a long-term care expense were to occur, they could pay for it. Of course, they can easily pay for the long-term care insurance as well. It might be that you figure you could self-insure part of the cost. Thus, you take out a smaller insurance policy to take care of the gap between the cost and what you can pay.
What are your family members’ thoughts? It is important to consult with family members about long-term care. It is the family members that can end up suffering the most when these things are not taken care of ahead of time. It might be that a son and/or daughter might be willing to help pay for some of the long-term care just to make sure that everything is covered. This ends up becoming a family risk. Make sure everyone gets input.
What long-term care benefits are the most important to you? You can get a long-term care policy loaded with all of the bells and whistles. You also get a big fat premium payment. I think that the must-have benefit is the inflation rider. You definitely want the insurance to keep up with inflation. However, other parts of the policy are negotiable.
When applying for a policy, you get to choose the waiting period. This is simply the number of days that you wait prior to the coverage starting. If you think that you could afford 180 days without coverage, your premium could be much lower. Of course, the most expensive policy would provide coverage from Day 1.
The other benefit is length of coverage. The most expensive is coverage for a lifetime and then it goes down to coverage for just a year or two.
Make sure that you customize your policy to where it makes sense for your needs and your pocketbook.
Copyright © 2008 Prudent Money and Bob Brooks. All rights reserved.
