Due to living longer, financial and care issues are likely to arise as we age. Your spouse, parent, or yourself, or someone you love may require assistance in the later years. You can prepare for such an eventuality with long-term care insurance, which covers costs not involving health insurance, such as assisted living.
At what age should you buy long-term care insurance?
According to the AARP, the best time to buy long-term care insurance in 2020 is between ages 60 and 65 if you’re in good health and single. Couples can start looking about five years earlier. You can buy insurance in your 40s but you’ll be paying more in premiums about two decades before filing a claim, on average. Waiting until age 70 will double your costs.
What does long-term care cover?
Long-term insurance will cover adult daycare, assisted living facilities, at-home care, and nursing homestays. You may also get help with daily tasks like food preparation, bathing, or dressing, especially if you suffer from a stroke or a broken hip. Such care may also include professional nursing, rehabilitation, and occupational therapy. Long-term care does not cover medical care, which should be covered by Medicare.
What is the maximum amount that a policy will pay per day?
The maximum daily amount that a policy pays depends on the amount you are willing to spend. A higher premium equals a higher maximum benefit. According to the Department of Insurance, the minimum amount you can select for home care in California is $50 with no minimum facility care.
To determine the daily maximum to select, figure out how much long-term care costs in your area, and then subtract the amount you can afford to pay per day.
What are the maximum number of days (years) that a policy will pay?
The maximum number of days that a long-term care policy pays varies, and also on how much you are willing to spend. Some policies cover care for two to five years, while others offer coverage for your lifetime. The maximum amount that your policy pays equals the maximum amount per day multiplied by the number of days of coverage.
Is it worth it to buy long-term care insurance as an investment?
No, the high cost of long-term care insurance is a bad investment unless the premium comes to 5 percent or less of your monthly income, according to Nolo. You can get better investment returns with other vehicles, such as mutual funds or stocks. You should consider such insurance to be a safety net rather than an investment.
Do any optional benefits increase with inflation?
Yes, many policies offer inflation protection as an optional benefit that you can buy. Among the choices are an automatic simple interest increase every year that does not depend on the current inflation rate, a compound interest increase added to the previous year’s interest rate, or an increase in benefits or maximums without any proof of insurability.
What is the average cost of long-term care insurance?
Pursuant to the American Association for Long-Term Care Insurance, the average cost per year at age 55 as of September 2020 depends on who needs long-term care insurance:
- Single male: $1,700
- Single female: $2,67
- Couple with both at 55: $3,050 combined.
The above assumes an initial policy containing benefits of $164,000 per person with a daily benefit of $150 and a three-year benefit of $164,000, including a 3 percent per year inflation option.
What is the next step?
If you’re interested in making a long-term care insurance policy a part of your aging plan, please contact Rancho Family Aging Services. We are a dedicated family concierge who will manage your aging plan in Riverside County. We’ve been in business for 29 years, with zero complaints at the Better Business Bureau.