In a recent article on Reuters the thought was presented that, long-term care insurance really is long term. When you buy a long-term care insurance policy, you are committing to paying premium dollars, sometimes for decades, until you access the benefits of that policy.
According to a recent study by Center for Retirement Research at Boston College, purchasers of long-term care insurance age 65 and older are letting the insurance policies lapse at a rate of over 30%! Nearly 1 in 3 people in this group who have paid out potentially thousands of dollars of insurance premiums are essentially throwing that money out the window.
So what is the reason this is happening?
The study concluded that, unfortunately, the people who need the coverage the most are the ones taking the financial hit. This segment of people are those who end up with cognitive impairments that will soon require care, or those on the lower end of income and wealth who would face the most impact from a medical financial crisis.
Having long-term care insurance is critical if you fall into the segment of population that is 70% of persons age 65 and older who will require some form of long-term care services during their lifetime. Long-term care insurance covers services received in nursing homes or through in-home care services as a coverage option. Medicare does not cover most of these services, which is a common misunderstanding among policy shoppers.
To put the potential costs you could face in a long-term care health services dilemma, per year costs of a private nursing home room could range from $70,000 up to $120,000+ depending on where you are in the country. In California, you should plan for the higher end of the cost spectrum.
If you want to have choices in your health care needs later in life, when other insurance does not cover those options, smart planning is needed to maintain your policy and dignity in long term care health and services.
What can you do about it?
Here are several steps you can take to avoid a lapse of coverage and loss of your financial premium investment.
First, when you consult with a California Long Term Care Insurance Services specialist (CLTC), ask them to make sure they find a carrier that will allow you to add a trusted friend or family member that can receive premium payment reminders. If you suffer from a cognitive impairment as your long-term care health need, you will need someone who can help maintain your policy and make decisions so it remains affordable and more importantly in force when those health expenses come due.
Second, work with your CLTC services specialist to be critical about planning the ongoing costs of your policy so that you do not find yourself making a decision you cannot afford for the long term. According to the American Association for Long-Term Care Insurance, a single 55-year-old male could expect on average an annual premium of $1,060 for $164,000 in coverage… females are a little higher at $1,390.
Third, work with your CLTC services specialist to set some decisions in place on what should happen if the insurance carrier has to take a rate increase to protect the longevity of its policyholders. These decisions could include reducing the daily benefit, or extending the elimination period (the delay in days to when a policy pays benefits).
Your CLTC services specialist can show you these decisions and how they would affect your premiums today, so you can know if you or your representative need to make them in the future what they could look like. You could also discuss reducing inflation coverage protection, or reducing the amount of time your policy pays out benefits, for example 3 years instead of 5 years.
Lastly, starting this conversation today with your CLTC services specialist is the best decision. There is no reason to delay planning, as there is never any cost or obligation to get your questions answered by a professional CLTC services specialist.
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Article Source: http://www.reuters.com/article/2015/10/22/us-insurance-longtermcare-idUSKCN0SG1NS20151022#dyDoMWpRRwfDFePY.99