What you need to know about long term care insurance
Statistics show that most people will need some help with daily living tasks at some point in their retirement years. And a fair amount of people wind up living in an assisted living facility or other similar care center. Those types of services are not cheap, and Medicare does not pay for them in most cases. That’s where long term care insurance comes into play.
What is it?
Long term insurance is a type of insurance policy that covers non-medical aid that you might need to help you live in your old age. Most policies cover stays in nursing homes or assisted living facilities as well as services to help you stay in your home, such as a home health aide.
Who is it for?
Care insurance is generally for older people who because of a mental or physical disability either need help in their homes or need to live in a facility where they can get help with daily living. However, it is a good idea to buy insurance when you are younger, because premiums are more expensive for older people who are likely to use the policy shortly after buying it.
How does it work?
To make a claim on a long term care policy, you usually have to take a test to prove you have a qualifying disability, and then there usually is an exclusion or deductible phase you have to meet, in which the insurance won’t kick in for a certain amount of time. Most policies have daily, weekly or monthly limits on how much they will pay.
There are two main types of care insurance for covering long term costs. Standalone long term care policies are policies that cover only your long term care needs. Hybrid policies combine life insurance along with long term insurance, in which case you get one type of coverage or the other, but not both.
The main benefit of having a long-term care policy is coverage for the cost of taking care of you in your old age if you become disabled. Such costs can easily bankrupt someone without such insurance.