The good news is - we're all living longer! The bad news is
- we're all living longer! As the price of everything goes
up, so does growing old. Fortunately we now have some
financial tools to help make the golden years more
comfortable emotionally, physically and financially. One
possible solution may be long-term care insurance (LTCI).
But don't jump on this premium bandwagon until you
understand what you're committing to. Like most insurance,
we don't really know how well it works until we really need
it. Here is some of the fine print to examine if you're
considering a long-term care insurance policy.
Long-term care is often considered an issue exclusively for
elders. Not so. Anyone who needs ongoing care because they
cannot independently perform the basic daily living
activities such as dressing, bathing, or eating due to an
injury, illness or even cognitive disorders may be a
candidate for long-term care. Affording long-term care is
something that concerns many of us and one way to deal with
the unpredictable long-term care costs may be long-term
care insurance (LTCI).
Hopefully you'll live a long and prosperous life and health
or money issues won't cloud your golden years. But, if you
want to be prepared, consider how to make long-term care
insurance work to your advantage. Don't count on Medicaid.
It does cover a bit of your long-term care expenses but
you've got to be dang near death or flat broke or a
combination of the two to qualify. Then there's your
friendly neighborhood HMOs, Medicare, and Medigap but guess
what. Right. They don't help much either.
Here are three things you can do to get over your anxiety
about this whole not-so-fun question of "How long will I
live and can I afford it if I do?"
1. Eat your dang vegetables! Your mother was right. They
are good for you and they keep you healthy. In other words,
clean up your lifestyle a bit and add a few more healthy
years to your life.
2. Make a ton of money. Yeah, yeah, yeah, your mother told
you to start saving early. If you did so and you've got
some financial plans in place, good for you. If not, it's
never too late to start with some basic planning and
investing.
3. Buy some long-term care insurance. We all hate paying
those premiums but the right kind of long-term care
insurance can be a lifesaver when the going gets tough.
Eat your veggies, make some money, and buy some long-term
care insurance. The first two are relatively easy; the last
one has a few complexities to be aware of. First of all,
get with an insurance agent you know and trust or ask a
friend or your accountant or lawyer for a referral. Here is
some of the even finer print to watch for when it gets down
to the nitty gritty of policy comparison:
1. Elimination Complication... Or, in the insurance
industry words, Elimination Period: This is the period of
time before your insurance policy will actually begin
paying out benefits. The typical options range between 20
and 100 days. This is also referred to as a waiting period.
Make sure and ask your agent to clarify what your
elimination period is and have him explain the cost/benefit
considerations of making it longer or shorter.
2. Time Crunch... Or, as the insurance industry puts it,
Duration of Benefits: The ceiling or limits placed on the
benefits a policy holder will receive. This may be limits
such as a set amount of money or a time limit of two years,
etc. Again, compare these benefits to your other financial
resources.
3. Daily Bread... Or, as the insurance industry feeds it to
you: Daily Benefit: This is the amount of coverage you
choose as your benefit on a daily basis. This typically
ranges from $50 to $350 per day. Another consideration may
be the cost of living in your specific locale. Health care
in a small town in Wisconsin may be less costly than
downtown San Diego. Your agent should be able to give you
some guidance on this.
4. Easy Rider... Or as our insurance friends call it,
Optional Inflation Rider: The term used to describe the
method of protection against inflation.
5. Done-Got-That-Bug Before Or, affectionately known as
Pre-existing Conditions and
we-aint-gonna-cover-your-tail-for-that-one-for-a-while
rule. The insurance provider will require a waiting period
(in some cases 6 or months or more) before full coverage
goes into effect on treatment for pre-existing conditions.
This varies from carrier to carrier.
6. Home on the Range... Or, our insurance folks refer to
this as Range of Care: In other words, coverage may vary
for different levels of care. Some care may be at a skilled
level, intermediate level, or a custodial level. The
facility itself has a range of care definition that your
agent will explain. The nursing home, assisted living
facility, and/or at home care are all levels of care that
come with a different price tag. Ask for clarification on
this.
7. Jacking Premiums... Or better known as Premium
Increases: Your policy will have terms in it that explain
if, how, and when your premiums will increase. Reality
check here. There is usually no "if" but there is almost
always a "when." Of course your costs will go up, just make
sure you know how much and if you have any options when
they do. Can you reduce the type of coverage you have if
your premiums increase or are you locked in? Ask your agent.
8. To Know me is to Renew me... Or more commonly referred
to as: Guaranteed Renewability: This is a policy agreement
in long-term care insurance policies that allows you to
renew it and maintain coverage even though you may have had
changes in your health.
9. Amazing Grace Period... Or in less poetic terms, Grace
Period for Late Payment: If you slip up and you're a little
late on your payment, this is how much time the company
will allow before they do something nasty like cancel your
policy. It is highly advised that you don't test just how
graceful your insurance carrier can be. They don't always
have the same sense of humor that this writer does.
10. No Debate Rebate... This is a fun one for a change,
Return of Premium: This is the little clause that says you
may get some of your money back if you haven't used your
policy for a certain number of years. Remember, we did say
"may get some of your money back."
11. Bed Pan Ally... Better known as Prior Hospitalization:
This is the clause that indicates whether or not you must
stay in a hospital before you qualify for long-term care
insurance benefits.
There's obviously a lot to know with this insurance game so
do your homework long before you need it. Make sure and
check with a financial planner, attorney or accountant to
get some guidance on this complicated topic. Not everyone
needs or qualifies for long-term care insurance so ask a
lot of questions and don't forget to eat your dang
vegetables!
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info. Steve Dahl is a freelance writer in Carlsbad,
California. He can be reached through the website.
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