All about Long Term Care Insurance

Overview of Long Term Care Insurance

Long term care insurance is one of the most complex topics in health insurance due to it's great variation amongst cases and it's relative nascence. This article tries to explain the salient features as well as highlight important factors.

Need for Long Term Care Insurance

For most people, health insurance is to protect against temporary illness or an acute disaster that can wipe out their savings. These usually cover the working period upto the age of 65, when Medicare takes over. However, as you get older,the chances of you requiring care on a constant basis increases significantly. You might need to go to a nursing home where you can receive help with your daily activities such as bathing.

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Medicare however, doesn't cover most nursing homes and has serious limitations on those it does cover - such as time spent inside the home. With the cost of such facilities skyrocketing, it's highly unlikely that you will be able to afford it. But what is to be done?

Long term care insurance is meant to address this need. You pay premiums on the chance that you will need care later down the line on a continuous basis. It isn't cheap, and there are many caveats. Let's look at two of them.

Factors to pay heed to

Long Term care insurance Premiums rise as you get older

While you can take out a policy at any age after 40, remember that the premiums get significantly higher as you grow older. This makes sense as the insurance companies are taking a greater risk.

However, don't fall for the insurance broker's suggestion to take it out in your 40s. They have a massive incentive to sign you up and you'll be paying for care well before you need it and can end up shelling out a lot of cash. Insurance companies know that the older people get, the more likely they are to cancel their premiums due to financial hardship. This is very profitable to them and they want you to start paying as early as possible.

Opt for a long term company

Since you're looking at a company that needs to be in operation for 30-40 years, ensure that you choose a reputable company to start off with. This will help protect your investments.

Specific Period vs Lifetime Insurance

Some tend to insure themselves for a "care period" of one to six years since it's cheaper to do so. Lifetime care insurance is much more expensive and more and more plans are evolving towards specific time periods.

Summary

Long Term Care insurance is a good choice for old age financial management. A large part of your finances are going to be dedicated to your health in your old age and it's best to ensure that you're well prepared. Shop around this site for the best deals and comparisons.