Five Questions To Consider Before Buying Long Term Care Insurance
A lot of people are indecisive of getting long term care insurance. Most of them question the importance of long term care insurance and rely on cheaper or economical means of insuring their elderly health. The views are always divided in the pros and cons of LTC. Supporters believe that long term care insurance is an essential financial planning meant to protect their assets saved for the heirs and secure a dignified living in their later years, without the guilt of ruining the family's savings and without running the likelihood of staying in undesirable facility. However, others believe that LTC is constructed mainly for the purpose of taking advantage with one of the most lucrative health care industry in America, and they believe that there are other ways aside from LTC.
Here are the five questions you should consider before deciding on long term care insurance:
How likely do you need it?
This is probably the hardest and tricky question you have to answer. You also have to consider your out-of-pocket savings and resources for the type of care in case that you opt for other means. Oftentimes, you'll find it hard to assess because you'll never know what would your status be 20 or 30 years from now. In some cases, there are people, although financially fit, end up miserable as they have exhausted personal savings to afford long term care. So if you don't have children or relatives to take care of you and has history of chronic illness, you'll more likely a candidate for long term care.
How much assets do you own?
This might sound blunt: Those who have accumulated only or less than $250,000 in assets up until their retirement should utilize their money for more important things or investments than pay for the LTC premiums. It's also possible for them to easily qualify for Medicaid eligibility should they need long term care.
Meanwhile, those with overflowing $2 million worth of assets may be able to pay the care out of their own expenses. Otherwise, if your assets fall in the middle, then you're the best candidate for long term care insurance. Meanwhile, even if your assets are $2 million and beyond, you also have to consider intangibles. This type of insurance allows you to make the most out of your money, especially if you are protecting these assets for your heirs.
What Kind of Coverage Do You Need/Want?
The cost of the policy depends on the type of coverage you need/want. The amount of daily benefit affects the pricing of long term care insurance. You'll have to decide of using add-ons such as inflation protection on your policy, but expect additional fee for the riders. However, it is advisable to get inflation protection to protect your policy and benefits from increasing inflation rate in few years.
The cost also vary on the elimination period or "deductible." A policy with 30-day elimination period prompts the policyholder to pay out-of-pocket for the 30-day period before the insurer takes over.
How Would you Like to Pay the Policy?
The policyholder can make regular payments during the life of the policy. Nevertheless, some companies today allow a customize paying scheme wherein policyholders pay for a single payment for the period of 10 or 20 years. This help policyholders reduce the fixed costs in retirement.
Is your Insurance Company Credible?
You are investing on expensive health care, so it makes sense to ensure the company will be making most of your money. It is extremely crucial to background check the company's financial strength before shelling out your lifetime assets. There are big names in the insurance industry but the recent financial crisis only left distrust on these companies' financial stability.
In finding the right insurance company, you should not look at the popularity alone and focus on the financial strength. It's best to research on the insurer's history first or check its ratings.
by: Marcia Cross