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Sometimes, as people age, they will need assisted care to maintain their everyday lives, especially those suffering from disabilities, disorders, or chronic medical conditions. These ailments may hinder daily activities including bathing, dressing, and eating. Not everyone has a relative who can help them in these situations. So, how does one prevent a challenging circumstance that makes their elder years difficult with financial and emotional stress? One solution is purchasing long-term care (LTC) insurance. This protection may cover personal and custodial care in your home or another assisted living facility. Are you considering purchasing long-term care insurance? Have you heard reasons against buying this LTC coverage? Let’s examine three fallacies surrounding long-term care insurance.
Fallacy 1: Long-term care insurance is too expensive to buy.
Several variables can determine the cost of long-term care insurance. For instance, the age at which you purchase a policy can impact how much you must pay for coverage. The younger you are, the lower your annual costs. Since you will be paying premiums longer, the insurance company will consider you less of a liability because you may pay more overall than an older person purchasing a policy. Financial experts recommend people begin shopping for long-term care policies in their late 50s. If you obtain a policy at a younger age, you may pay for coverage you will not need. According to the American Association for Long-Term Care Insurance (AALTCI), in 2024, the average annual premium for a $ 165,000 benefit policy with no inflation protection is $950 for a single 55-year-old male and $1,500 for a single female of the same age. If you are wondering why women pay more than men for LTC insurance, it is because statistics suggest women live longer and will need care for a longer period.
However, the price does decrease when a couple buys LTC insurance together. The AALTCI’s yearly price index survey states that, on average, a couple at age 55 pays a combined annual premium of $2,080 in 2024. How much does it benefit a person to buy at age 55 versus 60? The Association’s survey further illustrates that a 60-year-old male would average $250 more annually for the same coverage, and a female age 60 would pay $400 more. A 60-year-old couple would pay $520 more than a couple who are five years younger.
Decreasing the daily benefit amount can also reduce your premium costs. The daily benefit amount is the maximum cost your LTC policy will pay for your LTC expenses each day. Of course, you must find the right balance between meeting your LTC needs and still being within your financial budget. You can also lower premiums if you choose an elimination period in your policy. This component is a waiting period before LTC insurance begins. Generally, the time frame ranges from 0 to 365 days. The longer the elimination period, the lower the premium. LTC insurance covers a variety of services. Some cost more than others, and you must determine which services are most applicable and attainable through your budget. Empower Brokerage partners with friendly licensed agents who can assist you in these efforts.
Fallacy 2: Medicare will cover my long-term care needs.
Medicare does not cover long-term care in a nursing home. Yet, Medicare can cover hospital care, physician services, medicine, and medical supplies when you stay in a nursing home. Out-of-pocket expenses for a nursing home can be debilitating to you and your family’s finances. In 2024, the average annual cost for nursing home care is $90,000.
Long-term insurance can cover skilled and non-skilled care. When you start shopping for coverage, remember to ask one of Empower Brokerage’s helpful licensed agents about policies that cover nursing home care. Some other LTC insurance provisions might include assisted living, medical equipment, informal home care, and adult daycare services. You and your agent can evaluate your wants and needs to decide what coverage will work best for your unique situation.
Fallacy 3: “What if I don’t use it and my premiums go to waste?”
Hybrid long-term care policies are a growing trend among policyholders, and this option could be the solution for those who feel their premium may be for not should they never require long-term care. Hybrid LTC insurance combines LTC coverage and life insurance. This coverage can feature premium payments over a specific period or a lump sum upfront. If you never use long-term care, your beneficiaries will receive a death benefit you purchased with your original premium lump sum or series of payments. If you use part of the premium for LTC, what remains will go to your designated beneficiaries as a death benefit payout. Of course, this hybrid LTC insurance is more expensive than regular long-term care insurance.
There are many factors to consider when purchasing a policy of any kind. If you want professional guidance for long-term care insurance, please contact Empower Brokerage at (888) 446-9157 to speak with one of our hospitable licensed agents to help you examine your insurance needs at no cost to you. An agent’s guidance is invaluable because they know the insurance products well so you can make informed decisions. You may want to ask your agent about renewal guarantees and nonforfeiture benefits. These elements guarantee you receive some value if you cancel your policy. As always, read your policy carefully before signing the contract to ensure you know what your insurance provides through your payments, and ensure you comprehend the terms, conditions, and exclusions.
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