"If I would have known I was going to live this long I would have taken
better care of myself!" That funny line isn't so funny when you're
facing a health crisis without the funds to deal with it. Health care
costs go up as we age but fortunately we now have some financial tools
to help. Now we can make those golden years more comfortable; both
physically and financially. Here's one vehicle... Long-term care
insurance (LTCI). But don't hop on this insurance product until you
really understand what you're getting into. Like any insurance policy,
we learn how well it works when we really need it. Here are some of the
fine-print considerations to examine if you are looking at any form of
long-term care insurance (LTCI).
Long-term care is often considered an issue exclusively for elders.
Not so. A person who requires continuous care because they are unable
to independently perform basic daily living activities such as
dressing, bathing, or eating due to an injury, illness or in some
cases, cognitive disorders may be a long-term care candidate. Being
able to afford long-term care is something that concerns many of us.
One way to deal with the unpredictability of 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, get with a fitness
plan, clean up your diet, kick the smokes, and see if you can't add a
few more healthy years to your life before long-term care insurance
becomes a really big issue.
2. Make a ton of money. Yeah, yeah, yeah, your mother told you to
start saving early. If you did as mama advised and got yourself some of
that thar financial plannin' stuff then yer in dang good shape. If not,
it's never too late to start with some basic planning and investing.
3. Buy some long-term care insurance. Nobody likes paying those
insurance premiums but the right kind of long-term care insurance could
make a huge difference 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. Get with an agent you trust. Get a
referral from someone in the legal or financial fields. 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. They typical options
range from 20 to 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 lingo goes, 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, it's important to compare these
benefits to other financial capabilities and resources available to
you.
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 usually ranges from about $50 to as much
as $350 each day. Also keep in mind the cost of living in your
neighborhood. 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 will vary from company to company.
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 will also have a range-of-care definition
that the insurance agent should thoroughly explain. The nursing home is
one price. The assisted living facility is another. And of course, the
home care is still another price. Maybe a little complicated but this
each of these services has different costs and various levels of
service. Therefore they all have their own unique price tag. Ask for
clarification on this.
7. Jacking Premiums... Or, also 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 rarely an "if" but
almost certainly 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 wise that you don't put
your grace period to the test. They may not always have the same warped
sense of humor that certain article writers do.
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 tiny little clause that indicates whether or not you must stay in a
hospital before you qualify for long-term care insurance benefits.
It's obvious there's a lot to know about long-term care insurance
so do your homework early. 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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