When Should you Buy Long-Term Care Insurance?

At some point, we have all postponed buying something in the hope that it will be available at a later date, and at a lower price for that matter. Nevertheless, some of the purchases that you may want to postpone are just too important to wait for an extra day. Pushing forward the purchase of a long-term care insurance policy is one of them.

You may think that you will probably end up with a favorable deal when you put off the purchase of long-term care insurance for a later date. However, this isn’t the case because you are likely to spend even more than you planned. Provided that you are eligible for coverage, purchasing long-term care insurance now will save you the hassle of paying higher premiums in the future. Besides this, you might not even be eligible for your preferred coverage.

Why Buying Now is Advantageous

Apart from the fact that when you buy a long-term care insurance policy when you are younger offers you more coverage options, it also gives you peace of mind. According to the U.S. Department of Health and Human Services, 70% of today’s 65-year olds will need long-term care in years to come. With a long-term care plan, you will have peace of mind knowing too well that in case an unforeseen disaster occurs, you will get the care that you require without stretching your finances.
In addition, the cost of purchasing long-term insurance is always on an upward trajectory. As you age, you are likely to experience ill health more often. Therefore, you also need a cover that will shield you and your family from huge expenses in the event that you fall ill. In as much as you don’t have control over the time that you will need long-term care coverage, you have control over when to buy a cover for yourself.

To meet the ever-burgeoning cost of healthcare, insurers regularly review their plans. The market evolves constantly with carriers introducing new products with higher rates every couple of years. The dynamic nature of the market means that premiums will keep increasing in coming years owing to risk and assumptions rather than your age only. Buying at a younger age is the surest way of not only getting an affordable cover but also covering any future risks.
If you are aged 55 years, a typical long-term care cover may cost $2,000 annually. By the time you clock 60 years, the annual cost of that long-term care plan may have even doubled. This means that if you have a wait-and-see attitude, you might end up spending more money to buy a plan.
The five-year waiting period will cost you up to $30,000 if you sum up the cost of your premiums for at least twenty years, or until you clock 80 years. If you are a new applicant for a long-term care policy, you are likely to pay at least 5% more annually than you would have spent on the discontinued policy.

Long-term care services are generally expensive, more so to families that are catering for the costs from their own pockets. To put this into perspective, one only needs to look at the national average cost of care. A semi-private room in a nursing home averagely costs $6,990 per month. Assisted living care services cost $4,245 monthly for a one bedroom unit, while home health care averagely costs $3,872 per month. Without a cover, you will have to incur these costs in the event that you fall terminally ill. By all standards, these costs are exorbitant.

Buying long-term care insurance when you are younger is worthwhile because as you get older, you are likely to have age-related illnesses. Generally, insurance companies offer significant discounts and offers to long-term care insurance applicants who are in perfect health. Since these discounts are permanent, you cannot lose them even when your health worsens.

What is the Cost of Long-Term Care Insurance?

In as much as pricing trends are similar when different long-term care insurers are compared, the cost of coverage varies. Typically, individual carriers independently set their rates. This is mainly based on underwriting and their loss experience. Different carriers also have different requirements or terms and conditions. Therefore, the choice of a carrier can have a significant impact on the number of premiums that you will be required to pay.

Long-term insurance only provides cover for limited periods. It is improbable that the benefits will cater for long-term care costs “forever.” Therefore, it is advisable that you limit the cost of your cover by choosing policies that have shorter or longer coverage periods. In addition, you should choose the length of time that you will be dependent before long-term care insurance benefits kick in.

Is Long-Term Care Insurance Burdensome?

Contrary to what many people think, long-term care insurance isn’t burdensome. You need coverage because it will help you save money in the long run. Needless to say, most people pay health insurance, life insurance, and car insurance premiums. Fact is, none of these will come in handy when you need long-term care. In addition, it is fallacious to think that you will only need long-term care insurance when you get old.

In the recent past, life insurance was the preferred option for many individuals. Nevertheless, the popularity of life insurance policies has waned in recent years owing to the fact that life expectancy has increased significantly. Likewise, long-term care policies have gained popularity due to the realization that as people live longer, there’s a need for long-term care.

Don’t Wait Until You Are Ineligible for Coverage

Changes in the healthcare industries have led to the increase of long-term care insurance rates and the limitation of options. A minor change in your health can render you disqualified from coverage. For instance, some carriers are not allowing individuals who are using more than three medical interventions for blood cancer. This is an indicator that with time, more restrictions are likely to be imposed by carriers. If you purchase a policy today, you won’t be disqualified even when carriers impose new limitations.

Since older applicants are at a higher risk of illnesses than younger applicants, you will pay higher premiums if you postpone the purchase decision. The cost of long-term care insurance is largely based on the age of applicants. Without a long-term care insurance coverage, your family members will be the ones to incur the cost of taking care of you when you fall ill in your old age, Rather than passing down the burden to others, it is good practice that you purchase coverage for yourself before prices shoot up.

What is the Best Age to Purchase Long-Term Care Insurance?

You may be wondering which is the best age to buy long-term care coverage. Well, the truth of the matter is that there isn’t a prescribed age to purchase a plan. It is always affordable to purchase coverage as soon as you can afford it because certainly, you never know when your health will start failing. Not everyone falls ill when old and therefore, healthy adults should not even think about postponing the purchase.

The American Association for Long-Term Care Insurance (AALTCI) recommends that when purchasing long-term care insurance, you shouldn’t wait until you think you need it before you start planning for it. This won’t work in your favor because you are likely to push forward the purchasing decision and ultimately, end up buying a plan when the cost is higher. Since the rejection rate for long-term car insurance increases with age, AALTCI recommends 52 to 64 years as the ideal age for purchasing a cover. Nonetheless, you should consider looking into the available long-term care insurance options even sooner
It is important to take note of the fact that 43% of individuals who have long-term care insurance coverage are aged below 65 years. Someday you are likely going to require some sort of special long-term care regardless irrespective of whether you will have grown old or not. Rather than waiting to be caught up by events, you should make an effort and purchase a policy today.

Disability and Long-Term Care Insurance

Currently, a whopping 8% of individuals aged between 40 to 50 years have one form of disability or another. What’s even more confounding is the fact that these individuals will need long-term care services at some point in their lives. Insurance companies can tailor the policies of such individuals to capture whatever disability they are suffering from.

If you are disabled, the chances are high that you will require long-term care and consequently, you also need long-term care insurance coverage to weather tough times. Besides this, very few people have their retirement funded fully. Therefore, relying on your pension to provide the financial backing when you will need long-term care is deceptive since it might not just be enough.

Is Long-Term Care Coverage Just Important As Other Insurance Plans?

The fact that you might need long-term care coverage at some point doesn’t necessarily mean that you will ultimately use it. You never know when you are going to need long-term insurance. Just the same way, you probably pay your homeowners’ insurance premiums without knowing whether you will suffer a theft or fire incident.
Therefore, long-term care insurance is just as important as any other insurance plan that you currently have. Only a handful of people will ultimately need long-term care insurance due to improving standards of living. For this reason, purchasing a plan is hinged merely on the question of whether or not you will be in a position to afford long-term care in the event that a situation arises. This decision is based on the willingness to run the risk and secure your financial position.

Why Do People Postpone Purchasing Long-Term Insurance?

Most people postpone buying a long-term insurance plan in the hope that prices will fall. This is a misconception since prices always rise. Others think that they probably don’t need long-term insurance cover. Some even believe that they shouldn’t worry themselves about long-term insurance because the government pays for the services.
Generally, the government only pays for long-term care in special circumstances. Even so, the coverage provided when the government pays remains limited to specific situations and criteria. For instance, Medicare can cover the cost of rehabilitative or skilled services care in a nursing home for up to 100 days. Likewise, Medicaid can cover part of the cost of long-term care insurance. Nonetheless, you can only qualify for coverage if you are a low-level income earner.

The government can also cover part of long-term care for certain populations especially those who qualify via criteria stipulated by the Department of Veteran Affairs or the Older Americans Act. Even in situations when the government will step in to cover some of the costs involved in long-term care, you will still incur most of the expenses. Therefore it is prudent to purchase long-term care insurance.

You need to start looking at the decision to purchase a long-term care insurance plan as part of your life-long financial plan. Since underwriting for long-term care insurance varies from one insurer to another, you need to ensure that whatever plan you settle for factors in your age and medical history. You also need to take note of the fact that the best way of saving money when purchasing long-term care insurance is planning ahead. Always look around for insurance companies that offer competitive rates and those whose premiums are flexible and favorable. Working with an insurance broker will go a long way in helping you score a good deal when purchasing long-term care insurance. At Aines, Cater & Associates we can help you make the best decisions about your health by answering your questions and helping to make sense of long-term care insurance. Contact us to set up your appointment today.