For those who can afford the cost of Long Term Care (LTC) insurance premiums, financial and wealth advisers and medical care experts recommend buying it. A good LTC policy will cover most or all of the costs of extended care for illnesses or injuries in a nursing home, assisted living facility, or a home or other location The cost of residential care facilities and long term medical care tend to be a crushing financial burden, yet we all want to be comfortable in our old age. LTC insurance helps alleviate the burden and preserve assets for children and spouses, partners and dependants.
Here are key questions to ask when shopping for LTC insurance:
"Is there a limit on premium increases over the life of the policy"?
"If at some point I can't afford to keep paying the premiums, what do I get for the premiums I've paid up to that point?"
"Does this policy limit my options for receiving care and if so how, where and from whom can I obtain covered care?"
"What is the standard for eligibility for benefits?"
Over the 20+ years since insurers first began selling LTC policies, there have been many changes in the marketplace. At one time there were many insurers selling LTC policies. Now there are only a relative few to choose from. As people live longer and medical care costs continue to rise rapidly, insurers are having a hard time accurately pricing the policies. As a result, they've imposed steep, painful rate increases on existing LTC customers. Many people have had to drop/let their LTC policies lapse.
Consumer advocates and state insurance regulators are currently struggling to keep LTC premium increases to a minimum and help consumers deal with them. "Non-forfeiture" formulas that allow a consumer to get some benefit from an LTC policy they have to drop because they can no longer afford the premiums. But those type of provisions will only provide a fraction of the benefits most people need, so they're not an ideal solution. To make things even more challenging for consumers...insurers are now marketing "hybrid" policies that purport to generate investment income as well as insurance for long term care. Super complicated. Strong potential for shenanigans...
Bottom line: LTC insurance can ensure comfortable and affordable medical and daily care and preserve one's assets, but it aint cheap. UP strongly recommends working with an experienced and reputable adviser when shopping for an LTC policy. Below you will find a comprehensive list of UP publications, links, resources, and advocacy work related to long term care insurance.
Consumer Help Publications:
Resources and Links: