Statistics show that Americans are living longer. In fact, the average US life expectancy increased from 68 years in 1950 to 79 years in 2013, according to the Population Reference Bureau. While some people can live out their golden years with little to no health issues impacting their daily lives, most are not as lucky. In fact, the lifetime probability of becoming disabled in at least two activities of daily living, or of being cognitively impaired is 68% for people age 65 years and older, according to a report by AARP.
With these distressing statistics, you might want to consider a long term care insurance policy that can help provide you with the services you require when you are older without compromising the nest egg you’ve built for your retirement.
What is a Long Term Care Policy?
Long-term care (LTC) policies are devised to cover long-term services and support, including personal and custodial care, which include help with daily activities. These services may be covered in your home or an outside facility, such as a nursing home or an assisted living residence. Other services may include home adjustments, which can help make your home more accessible and safer, such as installing ramps or bathroom grab bars.
Generally, benefits begin when you need help with two or three activities of daily living (ADLs). The most common ADLs used include help with bathing, eating, dressing, using the toilet, walking and remaining continent, according to AARP. Other common long-term care services may include help with housework, managing money, taking medication, preparing meals and shopping for groceries.
Coverages vary among different insurance policies. Some providers require you to use services from a certified home care agency or a licensed professional, while others allow you to hire independent or non-licensed providers or family members. When considering a policy, it is important to ask whether the plan has restrictions on facilities and program options. Speaking to a Financial Advisor at Miller’s Insurance Agency can help you select a policy that is appropriate for your needs.
What are the different types of Long Term Care Policies?
According to Kevin Ralph, Certified Financial Planner™ at Secure Planning Group, a partner with Miller’s Insurance Agency, there are many options to choose from:
Traditional stand-alone – This LTC option is typically the least costly choice that allows you to purchase more LTC benefit options and allows for inflation. The downside is that insurance companies retain the right to increase your premiums.
A Permanent Life Insurance Policy with a long term care rider. This type of policy allows you to access a portion of the death benefit if you cannot perform two of the six ADLs. However, this option offers no inflation coverage and the costs can be higher. If you do not use the policy, the beneficiary is guaranteed to get the death benefit no matter how long you live.
A Hybrid Long Term Care Policy is a policy which typically requires a lump sum or payment that can be stretched out over a variety of different time periods, and can be extended for as long as 25 years. This option offers 3 benefits. First, if you pass away, the beneficiary would receive a death benefit that would be slightly more than what you paid in to the plan. Secondly, if you need long term care, there is a pool of money that you can access that will grow with inflation over time. Lastly, you can get the money back that you paid in to the plan.
When is the right time to purchase a Long Term Care Policy?
According to Ralph, the right time to buy long term care insurance is before it’s too late! LTC insurance premiums are based off of age and health. The older you get, the higher the premiums. While Ralph says that he typically finds the average age one purchases long term care insurance is 55, he advises that you start educating yourself before then and assess your individual needs with a financial advisor to determine the best option for you.
There is a lot to consider when determining which Long Term Care Plan is right for you. That’s why it is important to speak with a Financial Advisor at Secure Planning Group through Miller’s Insurance Agency who can provide the guidance and knowledge you need when considering your long term care financial options. A Financial Advisor will be happy to review the different opportunities that are available to you. Give Miller’s Insurance Agency a call today at (610)269-4500.