Long-Term Care Insurance

It is estimated that 70 percent of people over age 65 will require some level of long-term care.1 Many people are surprised to learn that most long-term care services are not covered under Medicare—or under most private health insurance plans.

Currently, the cost of care in a skilled nursing facility averages around $6,000 a month. Round-the-clock at-home nursing care can cost as much or more. While some people have sufficient assets to cover that level of expense for months, or even years, others find it advantageous to purchase long-term care insurance.

Your financial advisor and insurance advisor can show you how much flexibility you have in choosing the level of services you want in a long-term care setting.

As you consider whether long-term care coverage is right for you, it's helpful to talk with an insurance advisor in conjunction with your financial advisor. Together you can review various options, including the level of coverage and type of benefits most appropriate for you within the context of your total assets and your health history.

Another key consideration is when to purchase the coverage. Purchasing at a younger age—say in your 50s—typically means your premiums will be lower than if you purchase at an older age. Of course, it also means you are likely to pay premiums over a longer period of time. With most plans, premiums are waived during the time you receive benefits; some plans allow for premiums to end at a specified age. This is an important feature to note as you review plans offered by various providers.

Typically, the plan will cover care and services in a variety of long-term care settings:

  • Assisted living facilities
  • Nursing homes
  • Alzheimer's special care facilities
  • Adult day care centers
  • Hospice care

Most plans also cover at-home care, such as skilled nursing care or physical therapy. Some also include assistance with personal care, meal preparation or housekeeping.

As you work with your financial advisor and insurance advisor, you'll find that you have a great deal of flexibility in choosing the level of services you want in the settings you prefer. You will also have a choice in the length of time you want to be able to receive benefits, or the total amount of benefit dollars you want to be able to receive. Some plans include an inflation-protection feature.

These variables, of course, affect the cost of the coverage.

What's not covered? Any exclusions will be listed in the Outline of Coverage you receive before you apply and also in the policy after you have purchased coverage. Be sure to read these documents carefully; you may find it helpful to make your own list to attach to the policy for easy reference in the future.

Communicating with Your Family

The best time to plan for your long-term care is long before you need it. Involving your family in the discussion provides an excellent opportunity to focus on the positives of having choices. It also can help encourage other family members to consider their wishes and options and take steps to ensure that adequate assets and insurance have been incorporated into their overall financial planning.

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The most effective approach to financial planning is one that integrates all components—investments, insurance, savings for education, savings for retirement, credit needs, charitable giving, tax planning and estate planning—into a unified, coordinated strategy customized to your needs, priorities and preferences.

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