It is possible that you have never thought about taking up long term care (LTC) insurance. While this kind of insurance may not look important during the prime years of life, it is bound to gain importance during your sunset years. Indeed, after age 60, one is more likely to suffer from dementia, a generative illness or a chronic illness that will require constant extended care either at a nursing home or at home. This is where LTC insurance comes in since, unlike general health insurance, it is designed to cover personal and custodial care in the above-discussed settings. Additionally, long term care insurance covers you from financial risk and prevents you from draining your retirement savings.
Just like any other type of insurance, you ought to understand the basics of long term care insurance before taking it up.
5 Important Factors to Consider Before Taking Up Long Term Care Insurance
1. The Available Coverage
The benefits that your LTC insurance provides will normally depend on the specific plan you choose; some offers benefit amounts that are as high as $10,000 per month. This type of insurance is also unique due to the various modes in which policyholders can be reimbursed. Some long term care insurance policies reimburse a daily amount up to a preselected limit while others require holders to submit receipts that is within a non-cumulative monthly maximum. Still, some plans offer an income-style benefit that pays out a pre-determined monthly amount of money to cater for all your needs.
2. Coverage Specifics
Benefits from LTC insurance are meant to cover for your personal and custodial care in various settings such as home, an adult day-care program, a community organization, and long term or assisted living care facility. Typically, these facilities and programs offer personal care, nursing care, and homemaking services such as eating, dressing, and bathing.
3. Cost Information
Just how much your long term care insurance will cost depends on a variety of issues, such as your health and well being, as well as the age when you first apply for the policy. This essentially means that LTC insurance will be less expensive for younger applicants in their 20s compared to older applicants in their 60s. Other factors that influence cost include the options and number of benefits you choose, the length of policy coverage, and the selected waiting period. Majority of LTC insurance policies will usually have a waiting period of 30 to 180 days or longer from the time you become dependent.
4. The Meaning of “Dependent”
Long term care insurance starts offering payment after one becomes dependent. Dependency, in this case, means a position whereby you need constant care and supervision from a second party as a result of deteriorating health. Receiving standby assistance for transferring and bathing, as well as substantial assistance in two activities of daily living qualifies one as being dependent.
5. Payability of Benefits
Typically, the benefits of a long term care insurance plan can only be claimed when your coverage becomes effective, which in most cases means right after successful purchase. Some LTC insurance policies, however, only offer coverage past the age of 65 years. Additionally, once your coverage becomes effective, your dependency needs to persist for the duration of the waiting period in order to warrant the receiving of benefits. Different plans will offer different benefit durations such as 1 year, 2 years, 5 years, or even for a lifetime duration.
Featured Image: depositphotos/kchungtw
