How Much Long Term Care Insurance Coverage I Need?
How Much Long Term Care Insurance Coverage I Need
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Deciding on long term care insurance requires serious planning and personal assessment to avoid costly financial mistake in the future. The amount of coverage and the length of time(normally stipulated in years)the company will pay for the benefits must be determined because they can trigger the price of the premiums and the quality of service you will receive. There are four major concerns when determining the LTCi coverage:
Estimating the Daily Benefit Amount.The daily benefit amount is simply the amount yourlong term care insurance policy will pay for benefits on a daily basis. In a study conducted by the American Association for Long Term Care Insurance in 2008, 36 percent of Americans purchased an average daily amount of $100 to $149, while 33 percent preferred $150 and $199. Those figures were gathered from 2007 applications.
Remember that every person has different needs when it comes to long term care, so it makes sense if you assess your needs and your health first before deciding on the amount. Even though most people purchase between of $100 to $149, it does not assure that you will need the same amount for your care. You don't want to pay either less than or more than your actual needs.
Calculating the Best Benefit Period.Majority of Americans prefer LTCi policies that pay for two to three years.
Jesse Slome, executive director of the American Association for Long-Term Care Insurance, said that 20 percent of seniors age 65 and older will require more than five years of coverage. He also stressed that people should not consider the average benefit periodthe most because every person has varying needs and risks for long term care. In fact, longer benefit period equates to higher premiums, while shorter benefit period means lower premiums.
So what's exactly the best benefit period should I purchase? Don't go overboard avoid purchasing longer benefit period if you know you can't pay for it. Sometimes people become overwhelmed in insuring their health, without assessing if they could pay such expensive premiums.
Choosing the Right Elimination Period. The elimination period or the waiting period is normally referred to as deductible. The policyholder will choose the number of days he or she will pay solely for the costs of care, the insurer will pay only after that period ends. The common elimination period ranges from 20 to 100 days. Many LTCi policies offer longer waiting period up to 360 days at much cheaper premiums, but purchasing longer deductible could be risky because you are required to pay all the expenses incurred during that period before the company will intervene. You must have enough resources and savings if you consider longer waiting period. If you just want to lower your premiums considerably, go for 30 to 90 days waiting period as what majority of Americans purchase.
The Inflation Protection. The inflation protection rider is crucial to your policy, but this can add up the price of your premiums. According to Slome, an expensive inflation adjustment does not guarantee full medical coverage and there are various inflation options to protect your policy. The compound inflation rider helps boost your benefits up to 5 percent to keep it level with any increase in medical costs.
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