Long-Term Care: Purchase it Sooner rather than Later

It is never too early to invest in a long-term care (LTC) policy. LTC is something most people start to think about around the time of their retirement. However, by this time premiums will be much more expensive than if the coverage was purchased at an earlier age.

“Once you reach your early to mid-forties, you should start thinking about long-term care,” said Jennifer Krog, Life & Related Account Executive at McGrath Insurance Group. “Applications involve detailed medical questionnaires asking about your medical history and background. Rates are then determined by looking at an applicant’s age, health, and gender.”

The percentage of applicants qualified for good health discounts steadily decreases from 48 percent (ages 30-39), to 21 percent around the age of retirement (ages 60-69), and then down to 17 percent (ages 70-79), according to the American Association for Long-Term Care Insurance, 2012 LTCi Sourcebook.

Although LTC is usually associated with images of nursing homes and elders, it also applies to people of any age in need of assistant over a long period of time due to a chronic illness or disability. LTC support can be received in the privacy of one’s home, whether from a friend or family member or from a skilled RN or MD; in an adult daycare; in assisted living; in a nursing home; or in a hospice.

In order to access the benefits from an LTC policy, a person must not be able to perform at least two of the six activities of daily living (ADLs), the everyday tasks people tend to do without assistance. The six ADLs are bathing, continence, dressing, eating, toileting, and transferring.

Many people are hesitant to purchase an LTC policy, fearing that their money will go to waste if they do not need long-term care services. Fortunately, life insurance policies are working on providing other payment options for an LTC policy. The following information was gathered from the U.S. Department of Health and Human Services website, LongTermCare.gov:

  • Combination products: An insurance company will offer a long-term care policy with life insurance coverage so that benefits will always be paid, one way or another.
  • Accelerated Death Benefits (ADBs): This feature on certain life insurance policies allows the insured to receive a tax-fee advance on life insurance death benefits while still alive. There are different types of ADBs such as if the insured is terminally ill, has a life-threatening diagnosis, needs LTC services for an extended amount of time, and/or lives in a nursing home and is incapable of performing two of the six ADLs.
  • Life Settlements: This plan allows the insured to sell their life insurance policy for its current cash value when money is needed for long-term care services.
  • Viatical Settlements: This option can only be used if the insured is terminally ill, but it works just like the life settlements option by selling the life insurance policy for its current cash value. The viatical settlement pays for a percentage of the insured’s death benefits.
    Costs of Long-Term Care Services in Massachusetts:

The time to start thinking about investing in a long-term care policy is now. Contact Jennifer Krog for a quote at 508-347-6850 ext. 125, or at jkrog@mcgrathinsurance.com.

*This article is written for informational purposes only and should not be construed as providing legal advice.

Source: Genworth Cost of Care Study 2013 via LongTermCare.gov.