Long Term Care Insurance:
What to Look for in a Good Plan.

There are a number of key features for you to look for in a long term care insurance plan. There are many differences between one company's policy and another's. Some are not of great consequence, but others can make a big difference should you ever need long term care and access to the benefits of the policy. Some issues to consider:

The Company Itself

Make sure that the company that is underwriting the policy is a financially secure company that will be around when you need them. A.M. Best is an independent analyst that rates the financial strength of insurance companies. You should only look at long term care insurance carriers that are rated "A (Excellent)" or "A+ (Superior)". Also, most policies base your annual premium on your age at the time you purchase it. Although they reserve the right to raise your rate in later years, you should look for companies who have not raised their rates on current long term care insurance policy owners. Many people have been hurt over the years by companies that increase their premiums beyond the client's ability to pay, thus forcing the client to drop their plan just at the point when they may actually need the coverage. The best indicator of future behavior is past behavior: look for companies who are financially solid and who have never had a rate increase.

Home Health Care Coverage

Do not look at long term care insurance plans that won't cover home health care. The home is the location where you most want to receive care if possible, and long term care insurance should cover this, as well as care in a nursing home or assisted living facility. Also ask, who can provide the home health care? Do they only pay for higher levels of medical care in the home, or will the policy also pay for someone to come in and look after me, help with cooking and cleaning, or just provide some help and companionship? Will the policy pay for a friend or family member of my choice to provide the care for me?

Benefit Triggers

Most plans today will pay for care when either there is a cognitive impairment such as Alzheimer's, or if you are unable to perform a certain number of activities of daily living, such as eating, transference, bathing, toileting, and continence. Look for a plan that requires that you need help with no more than 2 of these daily activities for you to receive benefits, as well as one that will trigger benefits if there is a cognitive impairment.

Adequate Benefit Levels

Your plan should provide enough in money for you to be able to afford the care you require when you qualify to access the benefits of the policy. If Nursing Home costs where you live are $50,000 per year and your plan only pays for $35,000 per year, you need to be in a position to pay the remaining $15,000, or you may need to rethink whether you have adequate coverage. An inflation protection provision where your benefit levels will grow at up to 5% per year can help to keep up with the rising costs of home health care and nursing home care. If your current plan does not have inflation protection, you could be looking at a large gap between what care will cost and what your policy will pay for.

Conclusion

If you have purchased long term care insurance, and after careful review you conclude that the benefits and levels of coverage are appropriate for you, congratulations! If, however, you have yet to cover yourself against the potential devastation of long term care, or if your current plan does not meet some of the standards that you have just read, it would be wise to begin now to explore your options.

Notice: Learn more about our team and why you may want to consider contacting us. We are a Maryland-based business for local residents but we can also direct you to the appropriate agent in your area regarding the same strategies that we offer to improve your safe money management plan. Your future and your family will thank you for it!

Back to How To Protect Assets