Long term care insurance is an incredibly beneficial tool for financial security and preserving retirement income. And while having a plan is important, it’s true that long term care insurance can be confusing at times.
As with any insurance product, LTC insurance has gone through evolutions to keep up with the times. Changing health care needs, rising costs and our larger overall economic climate mean the perfect long term care insurance of 10 and 20 years ago, is not necessarily the optimal long term care insurance of today.
As a result of these shifts in long term care insurance some misconceptions have sprouted up. In this article, we will focus on 4 common LTC insurance misconceptions that should be set straight.
A common misconception is that long term care insurance is a way to cover health care costs. This misconception often leads to false expectations when it comes to your plan and coverage.
In reality, long term care insurance is designed specifically to cover the costs associated with custodial care – basic daily functions such as eating, dressing and bathing, wherever that care is needed: at home, assisted living or a nursing home.
While today’s long term care insurance policies are affordable, policies written during the early years of long term care insurance offered even more modest premiums. With that being said, over the last 20 years, a combination of factors including an increase in the number of claims paid, lower interest rates on the insurance companies’ investments, and fewer policyholders lapsing their coverage, have led some of these policies to require premium increases.
Even with increases, however, existing policies are still quite affordable.
Though premium increases do occur, it is possible to avoid increases in your monthly payments by taking advantage of the options offered by the issuing company. Most long term care policies enable you to modify and alter benefits or riders to keep your out of pocket costs down. The flexibility to reduce your policy’s inflation rider, shorten benefit periods, and adjust other features provides avenues for keeping your benefits consistent.
What’s more, with the introduction of hybrid long term care products, which combine life insurance or annuities with long term care benefits, you can eliminate the possibility of premium hikes completely, by taking advantage of level and one-time premium payment features.
Similar to auto and home insurance, the cost of long term care insurance has increased over the years. Factors like longer life expectancy and higher cost of care have led to an increase in overall premiums in the last 20 years, but that does not mean long term care insurance is expensive.
Make no mistake – a long term care insurance policy will enable you to save big if you are in need of long term care. Without a plan in place, long term care will undoubtedly be a great financial burden to you and your loved ones.
While Medicaid is an option for funding long term care costs, it’s typically not a very good solution for most people.
Medicaid requires individuals to spend down their assets first, and from there, benefits are limited across coverage length, care type and benefits paid.
Aside from paying enormous long term care fees out of pocket, long term care insurance is the only way to ensure you receive the type of care you want.
It’s more important than ever to look into long term care insurance and establish your long term care plan. A qualified advisor, such as Schneider & Shulman Associates, can craft a plan that perfectly fits your lifestyle and needs.