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Most people receive Long-Term Care (LTC) insurance as part of their employment benefits package and often confuse it with another benefit, Long-Term Disability (LTD) insurance. Employer-sponsored LTD insurance replaces a portion of your income, if you cannot work because of an illness or an injury. LTC insurance is also confused with health or medical insurance.
nj.com’s recent article, “The benefits of long-term care insurance” explains that long-term care insurance isn’t meant to be disability income replacement, and it isn’t medical insurance. LTC insurance covers the varied personal needs of persons who are ill and (even temporarily) incapacitated. This includes feeding, clothing, bathing, driving to appointments and doing the extra washing.
Some people consider LTC insurance as what was once called “Nursing Home Insurance.” This evolved to include either care at home or care in a rehab or nursing home facility.
Married couples are especially susceptible, when one spouse becomes ill or injured because the extra costs of long-term care can eat up all their savings and bankrupt the caregiver spouse. For that reason, those in their 50s should start to look at LTC insurance for several reasons:
Annual premiums are lower when acquired at younger ages; and
Aging may bring health issues in the future, which may prohibit the opportunity to buy LTC insurance coverage altogether.
There are many ways to tailor LTC coverage to make it affordable. The most critical components of an LTC insurance policy include the following:
The average period of need for most people is three years.
The daily amount of coverage varies by geographical area.
Home care should be the same as that for care in a facility.
The waiting period, which determines when the coverage actually starts, after the date the incapacity began.
Married individuals can get a combined policy with a discount.
An inflation rider: The daily cost of coverage will naturally increase over time with inflation. Therefore, selecting a rate of inflation will ensure keeping up with rising costs in the future.
LTC should be a part of every couple’s financial and retirement plan. It’s not inexpensive, but it is considerably less expensive than paying out-of-pocket for long term care.
Reference: nj.com (January 6, 2019) “The benefits of long-term care insurance”