Is Long Term Care Insurance Worth It

Tap Into ‘living Benefits’ On A Life Insurance Policy

Also known as an accelerated death benefit, this feature is available on most permanent life insurance policies such as whole life insurance. It lets you take a portion of the life insurance payout while youre still alive to pay for medical expenses, including long-term care. The death benefit is reduced by the amount used for long-term care.

• Pro: The cost is included in your rates on some life insurance policies, and you can add it for a small cost on others when you buy.

• Con: The triggers for when you can access the benefits for care vary by company, so read the fine print carefully. A trigger could be a terminal illness diagnosis. Also, using the policy for long-term care reduces the payout your life insurance beneficiaries will get.

When Should You Sign Up For A Long

The best time to purchase a long-term care insurance policy is in your mid-50s or 60s, when you are still in relatively good health.

The two most important factors to consider are your age and your medical condition.

Medical condition

How old you are will affect how much you pay for a plan. As a general rule, the older you are, the more expensive your policy is. If you wait too long to purchase a plan, the high cost of coverage may make a plan unaffordable. And if you wait past a certain age to try to purchase a policy usually your mid-70s you are probably going to be denied coverage by the insurance company.

How old you are will affect how much you pay for a plan. As a general rule, the older you are, the more expensive your policy is. If you wait too long to purchase a plan, the high cost of coverage may make a plan unaffordable. And if you wait past a certain age to try to purchase a policy usually your mid-70s you are probably going to be denied coverage by the insurance company.

Medical condition

Additionally, you have to qualify based on your health status when applying for a long-term care insurance policy. This means you are going to have to answer a battery of questions about your health. You are probably going to have to take a physical examination as well.

There Are Several Type Of Long

A typical, traditional LTCI policy will pay a predetermined amount for each service â for instance, $100 a day for nursing home care. There generally will be a limit to the benefits you receive, either based on a number of years or a dollar amount. A plan that offers pooled benefits will set a total dollar amount for the various services you receive.

New types of LTCI policies are growing in popularity, extending beyond the traditional âuse it or lose itâ type, many of which have experienced premium increases.

One alternative is hybrid life and long-term care insurance. This type of policy combines long-term care insurance with permanent life insurance and provides more options:

• If you need long-term care, you can tap the policy benefit.
• If you die before needing long-term care, the policy has a life insurance benefit.
• If you decide you need the money for something else, you can typically receive a cash value that can be roughly equal to or less than the total premiums paid.
• Contract terms and premiums are guaranteed not to change.

Another alternative is a universal life insurance policy with a LTCI rider. This option might be right for you if youâre interested in a meaningful death benefit for your beneficiaries in the event LTCI isnât needed.

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Seventy Percent Of All Current Retirees Will Require Some Form Of Long

After a lifetime of hard work, you’re ready to enjoy your golden years and live life to the fullest — all without the burden of workplace drama or demanding deadlines. If everything goes according to plan, you’ll live out the remainder of your life happy and healthy.

However, a lifetime of experience will likely have taught you that things don’t always go according to plan. Even if you’re in good health now, your circumstances may change — and you may find yourself needing long-term care at some point later in life.

Image source: Getty Images.

What Can Disqualify You From Long

Insurance companies price risk differently, which means some may be more lenient than others when it comes to certain risk factors. In general, long-term care insurers will pay special attention to your medical history and any family history of debilitating illness.

Being in poor health or needing help with daily living activities could make it harder to get approved for coverage or to qualify for lower premiums.

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Final Thoughts On Long

Is a long-term care insurance policy worth it? It depends, but for most people the answer is yes. Regardless, you cant dispute the need to plan for long-term care, especially since the likelihood of needing some sort of care is significant. With so many options, many of which are complex, we recommend consulting with a financial advisor who can help guide you to the best solution given your specific situation.

Planning for retirement planning can be complicated and overwhelming. Vision Retirement can help simplify your journey.

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DisclosuresThis document is a summary only and not intended to provide specific advice or recommendations for any individual or business.

What Kind Of Care Might You Need

What if you break a hip later in life? What if your mind remains fully alert, but you need help cooking, cleaning, and dressing, and you do not want to move in with a family member? Who would help, and how would you pay for their help?

Nursing home costs averaged around $290 per day in California. If you have sufficient assets to cover these costs, then you do not need long-term care insurance. If you do not have sufficient assets, without long-term care insurance, you will end up spending down the funds you have before you see whether you qualify for Medicaid. Long-term care insurance buys you time and enables you to afford quality care.

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When Is It A Good Idea To Get Long

We recommend getting long-term care insurance when you’re 60. The longer you wait, the more chances you might be denied coverage. In fact, research shows that around 22% of people in their 50s were denied. This number jumps to 33% for those in their 60s and a whopping 44% of people in their 70s.13

Even if you just have a few small health conditions, it might be difficult to get coverage after a certain point. Insurance companies are all about dealing with risk. And if they deem you to be too risky, youll potentially be left without coverage.

So, youve decided long-term care insurance is worth it, but how do you actually buy it?

Well, you can either shop around on your own and compare plans. Or you could work with a trusted and independent insurance agent who is part of our Endorsed Local Providers program. These insurance pros are RamseyTrusted and will look at your specific situation to find you the best policy.

Connect with one of our friendly ELPs today to get peace of mind about your future.

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

Other Ways To Use Life Insurance To Pay For Long

If you already have a permanent life insurance policy you might be able to convert it to a hybrid policy using a 1035 exchange, says Sweeney of Coverage Inc. You must qualify health-wise for the new policy, and you must have built up enough cash value in the existing policy to fund the new policy.

You also could use a cash value life insurance policy to pay for long-term care. You can take a loan, withdraw cash or fully surrender the policy for the cash value.

You could sell a permanent life policy to a life settlement broker for cash if youre age 65 or older. Youll get less than the death benefit but more than the cash surrender value. Be careful because the payout might be taxable.

If you have a term life policy, you might be able to access a portion of the death benefit while youre still living to pay for care. Term policies typically have an accelerated death benefit rider that lets you use up to 50% of the death benefit amount if youre terminally ill, Sweeney says. The payout might be taxable, and it will reduce the death benefit that your beneficiaries receive.Before you use any of these strategies, read the fine print of your insurance policy. Sweeney recommends talking to your insurance agent to understand the implications and review the downsides.

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Will I Need Long

Its hard to know for certain whether youll need long-term careassistance with daily activities such as bathing, dressing, and eating for people experiencing physical or cognitive declinebut statistics suggest most of us will.

According to LongTermCare.gov, about 70% of people ages 65 and older will need long-term care at some time in their liveswomen more so than men . For some, this care might be required only for a few months, but others may need it for several years or longer.

Understanding Your Options When Choosing A Plan

Level benefits vs. growth

One of the first things to look for in a policy is protection against inflation. And that means buying a policy with a built-in growth rate to mitigate the effects of rising prices. That added protection costs money, doubling or, in some cases, tripling the cost of certain policies.

Your costs

There are other considerations when purchasing a policy how much insurance you are interested in purchasing, for example, and how much you are willing to spend on a policy.

Exclusionary period

Most policies impose a 90-day waiting period between the time you qualify for a policy and when coverage actually begins, forcing you to pay for the coverage during that exclusionary period.

Preexisting conditions

You may also be offered a long-term care insurance policy with an exclusion for preexisting conditions. This could be a temporary exclusion, not covering the costs of the preexisting condition for a certain amount of time, usually six months. Or it could be broader, and for example, an insurance company could not pay any costs associated with a preexisting condition such as heart disease.

As a general rule, long-term care policies will not cover costs resulting from alcoholism or drug addiction.

With some plans, couples can purchase a shared care policy, which costs more but allows one spouse to tap into the plan benefits of the other spouse if needed.

Hybrid insurance policies

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Do Some Math Before You Buy

Keep in mind that your insurance policy will only remain active if you pay your premiums year after year. If you start paying at age 65 and don’t need long-term care until you’re 85, you’ll have paid your long-term care insurance premiums for two decades before you use your policy.

At this point, you’ll have paid more than $42,000 in premiums as a man, and over $62,000 if you’re a woman. If you need long-term care in a high-intensity setting for the last few years of your life, that investment might pay off.

However, it’s more likely that you might not face any costs at all. Notably, the U.S. Department of Health and Human Services estimates that 63% of retirees are expected to incur $0 in long-term care costs over their lifetimes, either because they won’t need long-term care at all or because they’ll have access to substitute care provided by relatives or loved ones.

In light of this fact, it may be worth considering what would happen if you simply saved the amount you would’ve otherwise paid in premiums. Assuming you save $2,100 annually and then invest it — achieving a 7% compound annual growth rate — you’ll end up with over $86,000 after the same 20-year period between ages 65 and 85.

If you save $3,100 per year instead and manage to compound at the same rate, you’ll be left with more than $126,000, enough to cover a substantial portion of your long-term care costs — if they ever materialize.

Long Term Care Insurance

The California legislature requires the Insurance Commissioner to annually prepare a Consumer Rate Guide for long-term care insurance. This website consists of an overview of long-term care insurance, the types of benefits and policies you can buy, both as an individual and as a member of a group, information on what to consider before purchasing a policy and the premium rate history of each company that sells long-term care insurance in California.

This website will help answer some of your questions about long-term care insurance. It explains why people may need long-term care and how this type of insurance can help cover the cost for care. Long-Term Care policies most often pay for benefits on a reimbursement basis which means that the payment will be made to you after you have received the covered care and/or incurred the costs and submitted a claim. However, there are some policies that will pay a cash benefit. It is important to understand the coverage provided and how benefits will be paid/reimbursed before you purchase a long-term care insurance policy. When you receive your policy, be sure to read it and ask questions if there is anything in the policy that you don’t understand. The Rate Guide explains how long-term care insurance is structured and what benefits you can buy. A qualified long-term care insurance agent or the Health Insurance Counseling and Advocacy Program can help you with these questions and many others.

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Our Top Picks For The Best Long

• Nationwide: Best for Customer Satisfaction

J.D. Power Rating

813/1000

Nationwide is one of the largest insurers in the United States, and was ranked among the best for customer satisfaction in J.D. Powers 2021 U.S. Life Insurance Study. As a well-known national insurer, Nationwide’s reputability adds an extra layer of assurance for customers looking to invest in financially secure products.

Nationwide sells universal life insurance policies with two long-term care options: as an LTC rider and a hybrid policy that includes both life insurance and LTC benefits called CareMatters.

Nationwide policies have some pretty convenient perks. For one, unlike many competitors, once qualified, it doesnt require you to submit receipts and bills monthly in order to get your benefit. You can also use your benefits to pay for care from informal caretakers, such as family members.

Note that coverage depends on your location and the LTC rider isnt available in every state.

J.D. Power Rating

795/1000

Mutual of Omaha offers three types of discounts: 15% for partners who purchase the same policy, 15% for being in good health and 5% for married customers . Discounts are stackable, with premium discounts applied to the total premium amount and additional discounts applied to the remainder.

Mutual of Omaha also came in fifth place for customer satisfaction in J.D. Powers 2020 U.S. Life Insurance Study and has a solid financial strength rating of A+.

J.D. Power Score

777/1000

Vale La Pena El Seguro De Cuidado A Largo Plazo

En general, las personas se han negado a comprar atención a largo plazo debido a su alto costo. Algunas personas pueden cubrir los costos de la atención a largo plazo de su propio bolsillo gracias a los ahorros o al valor acumulado de la vivienda. Otros podrían reducir los gastos al recibir atención de sus seres queridos sin costo alguno.

Para aquellos que cumplen con los estándares de calificación financiera específicos, Medicaid es una opción. El seguro LTC es una estrategia para compensar los costos de la posible atención a largo plazo, aunque muchas personas carecen de estas opciones.

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Best For No Waiting Period: Lincoln Financial Group

Lincoln Financial Group

• No. of Policy Types: 4
• Coverage Limit: $500,000

Lincoln Financial Group offers four plans with no waiting periods and it also provides benefits to those living abroad.

• Must contact agent for pricing details

• Need to wait six years for return of premium

In business since 1905, Lincoln Financial Group has earned an A+ rating from AM Best. The company rises above the competition and is best in our review for no-waiting period plans. These are its MoneyGuard II and MoneyGuard III policies, both of which offer zero-day elimination periods for accessing coverage for nursing homes and assisted living facilities. Other companies on this list generally require a minimum of 90 days before granting coverage for such services.

With MoneyGuard II, a universal life insurance plan with an optional long-term care benefit rider, premiums are locked in from the start. Customers can get tax-free reimbursements for qualifying LTC costs, and there’s no waiting period.

Some of the key features of the company’s other no-elimination-period plan, MoneyGuard III, include no medical exams or lab tests required for underwriting, a couple’s discount, choice of a range of inflation protection options, and a death benefit ranging from $50,000 to $500,000. The company’s terminal illness rider allows for a one-time claim of 25% to 75% of the death benefit up to $250,000 in the event of a terminally life-threatening condition.