Planning for Long-Term Care
It's difficult to think about your own mortality and health as you get older, but with the right plan in place, you can make sure you are taken care of if you become unable to care for yourself.
Your State Farm® agent can help you learn more about long-term care insurance for you or your loved ones and find other ways to help you prepare for your future.
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Why Would You Need Long-Term Care Insurance?
According to a recent article in Forbes, the average cost of a private room in a nursing home is $87,000 a year. For most people, that's an overwhelming expense, and it's probably not the only one. What if you require nursing home care, and your spouse still has a mortgage or rent to pay? Managing both living expenses can be financially devastating.
Standard employer-based medical insurance doesn't cover long-term care. Neither does Medicare. While Medicaid offers some long-term care services, the financial requirements for receiving benefits vary from state to state and are often strict. This can make it difficult to qualify. So for many, long-term care insurance can help provide the health-care protection you desire.
When is a Good Time to Apply for Long-Term Care Insurance?
Long-term care policies are typically offered to individuals who are reasonably healthy. Most people who consider this type of insurance are generally between the ages of 52 and 64. The younger you are when you apply for this coverage, the lower the premium.
Another reason to consider applying early is that according to the American Association for Long-Term Care Insurance (AALTCI), only 11 percent of applicants who apply for this coverage are turned down at age 50 or below, while 24 percent are declined between ages 60 to 69.
What Are the Benefits of Purchasing Long-Term Care Insurance?
If you have substantial assets or savings, you may be able to self-finance your long-term care. But for most people, the thought of spending their life savings to pay for the high cost of nursing or home care is not an attractive option. Long-term care insurance helps protect your assets and eases the burden of asking your children or other family members for assistance.
Once you purchase long-term care insurance, your policy can't be cancelled and rates can't be raised based on changes to your personal health status. Rates can only be raised across the board in your policy class. The policy is usually guaranteed for life and generally can only be cancelled due to non-payment of premiums.
Long-term care insurance premiums may even be eligible for an income tax deduction. Check with your accountant to see if you qualify.
What Are the Risks of Purchasing Long-Term Care Insurance?
Long-term care insurance is expensive. As with life insurance, you are buying protection against a worst-case scenario that you hope never occurs. Unlike certain forms of life insurance, you can't tap into the policy's cash value and borrow from it.
Most long-term care policies don't pay out benefits until you have been certified as chronically ill and received care from an eligible provider for a specific time period—known as the elimination period. The elimination period is similar to a deductible under other types of insurance policies, and it is the number of days you receive and pay for eligible care before receiving benefits. In most states, State Farm® offers Long-Term Care Insurance with a choice of 30, 90 or 180 day elimination periods. After meeting the chronically ill certification requirement and satisfaction of this period, benefits will be paid for each day of eligible care for charges incurred up to the daily benefit amount in your policy.
What Factors Are Important in Purchasing Long-Term Care Insurance?
- Age. The older you are when you purchase long-term care insurance, the more expensive it will be.
- Gender. On average, women outlive men by five years and are more likely to live alone, without assistance.
- Health status. If there is a family history of certain chronic illnesses (such as high blood pressure or diabetes), you are more at risk of health problems later in life and might need additional financial assistance as you age.
- Financial resources. If you do not have enough personal savings to afford a year in a nursing home or two and a half years in an assisted living facility, then purchasing long-term care insurance can help ease the financial burden of long-term care services.
The information in this article was obtained from various sources. While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. These suggestions are not a complete list of every loss control measure. The information is not intended to replace manuals or instructions provided by the manufacturer or the advice of a qualified professional. Nor is it intended to effect coverage under any policy. State Farm makes no guarantees of results from use of this information. We assume no liability in connection with the information or the suggestions made.
Neither State Farm nor its agents provide tax, legal or investment advice. Please consult your own adviser regarding your particular circumstances.