Long term care insurance helps pay for care not covered by Medicare or other health plans, like Medicaid. Though it may be costly, paying out-of-pocket can quickly deplete savings. While policy premiums vary depending on several factors such as age, gender and health; young and healthy individuals should purchase such policies sooner so as to take advantage of any discounts that may apply.
The premium you will pay depends on several factors, including your age and whether or not you purchase traditional long-term care insurance or hybrid long-term care policies. A hybrid policy combines traditional long-term care insurance and life insurance, and may have more flexible benefits, with beneficiaries receiving their money back if any unused benefits go unused, according to Brian Gordon of Murray A. Gordon and Associates in Bannockburn, Ill. Marital status can also affect pricing – couples applying together tend to save hundreds on average when compared with single applicants!
Traditional long-term care policies are contracts with insurance companies that pay beneficiaries daily amounts until a specified length of time or until death, whichever comes first. You can select coverage anywhere from one year to your entire lifetime depending on your financial goals and what the policy will cover. Some policies even feature inflation riders to adjust benefits every year with rising costs, keeping up with inflation costs.
Purchase of long-term care policies may not be necessary, but investing in them could protect assets and provide security for yourself and family. Seek advice from an expert who specializes in long-term care planning; they’ll help find an appropriate policy plan.
Along with the cost of long-term care insurance policies, it is also wise to factor in potential long-term care services expenses such as nursing home stays, live-in aide services or home healthcare facilities. The National Clearinghouse for Long-Term Care Information offers an interactive tool which can help estimate these potential costs in your region.
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The American Association for Long-Term Care Insurance issues annual reports on carrier insurance rates. Their 2022 report indicates that a 55-year-old male would pay around $2,220 annually for a policy to cover $165,000 at age 65 and $400,500 by 85 with benefits increasing by an assumed 3% annually.