Earlier, we wrote about the need for long term care insurance. The likelyhood of needing to pay for long term care in some form is nearly HALF for those 65 and older. We are simply living longer and our bodies are more likely to break down the longer we live.
The primary reason that people don’t get long term care coverage is of course – COST. So let’s look at some ways which can help someone to control the cost on a policy. Keep in mind also that the cost of the premium is still FAR LESS than the cost of coverage if the entire amount is coming out of your pocket when you have a need. Again, the reasons to own a policy are to protect your savings from having to be spent down, and also to have choices over the type of care you would be able to receive when the need arises.
1. Buy the policy between age 55 aand 65.
This should be obvious. Yet most people don’t think of it, or they put it off and want to look at it later, after age 65. Premiums are much higher at this age, than for someone in their late 50’s. Also you would like to be able to pay for the premium out of savings or dividends from an investment. Lets say your premium is $4000/year. If you have assets of at least $150,000 or more, you should be able to generate enough dividends to pay the premium from that without depleting your nestegg.
2. Meet with your representative to determine the proper per day amount of coverage.
In the previous article, we talked about the IN Partnership. If you looked at a policy with $5000/month coverage that would also work out to $167/day. You can select the amount of years you’d like to be covered for. 4 years at this rate would give you a total policy value of $240,000, which would easily satisfy the requirements for total asset protection in Indiana. You could also opt for less years (2 years or 3 years), which would lower your cost.
3. Look at a longer elimination period.
The elimination period is like the deductible on auto or health insurance. The longer you are able to pay for care out of pocket yourself, the lower the premium will be. Of course, just like the deductible, you need to have the savings to back it up, when you have a need. Look at your savings and determine what is a realistic “out of pocket” amount you can handle, and relate that information to your agent.
4. Use a representative who represents a variety of insurers to get the best rate.
Be careful though. You don’t want “cheap” when it comes to insurance. I work primarily with 3 providers – John Hancock, Met Life, and Genworth. These are all major firms with solid reputations who are the leaders in Long Term Care. Of course we can look at all 3 and find which one may provide the best fit (and best value) for the client.
For more information on long term care, please visit my website http://www.deanvoelker.com. You may also follow me on Twitter, http://www.twitter.com/deanvoelker. I also host a weekly internet radio program, “Improving Your Financial Health” at http://www.blogtalkradio.com/401kcoach.