Long-term care insurance is designed to pay for extended stays in nursing homes and other lengthy health-care needs. Members of the Financial Planning Association of Greater Indiana say it's worth buying to protect you in your golden years.
 
 
Julie Hurst
Wealth Preservation Strategies

Start younger, rather than older. You may pay more years (unless you use a short-pay option), but you'll pay less overall. (Request a "True Cost of Waiting" chart.) Rates increase dramatically with age, and a poor health history could result in 100 percent self- funding.

Rates are very favorable from ages 40 to 55 and manageable at ages 56 to 68. Traditional plans at age 69 to 85 can get very expensive, but it's a great time to consider the asset-based long-term care insurance options. These rates are lower and have a lifetime rate guarantee.

General guidelines: Stick with a top-rated company. Having limited coverage is better than none. Don't underestimate the likelihood of using this coverage. Today's plans pay for all levels of care and personal services like laundry, cooking, cleaning and transportation, where private health, Medicare and supplements do not. Some plans even provide you personal cash payments to use as you see fit.

Who to work with: Be sure to work with an adviser who is knowledgeable in long-term care insurance options. Ask how many plans they place with clients each year. Work with those that are independent who can offer the best solution for you versus fitting you into their plan.

And ask what benefits they own themselves. A well-versed adviser will know the differences between contracts like service days versus calendar days on waiting periods, reinstatement rules, care advisory service differences and which plans have the home-care extras, just to name a few considerations.

Chris Baker
Oaktree
Financial Advisors

Long-term care insurance premiums are based on your age. The earlier you buy the policy, the lower your premiums will be. Even though you may pay for a longer time, you can benefit from:
• Potentially lower total costs.
• Benefit amounts that increase over time.
• Decreased risk of being disqualified due to a change in health.

Genworth Financial's 2006 Cost of Care Survey reports that the average cost of a private room in a nursing home is $70,912, while a private room in an assisted-living facility carries an average annual cost of $32,294.
When you see these costs, consider how they would fit into your budget if you were to need care.

The prudent move is to compare your sources of income and assets to your anticipated financial needs in retirement, then consider whether investing in long-term care insurance is appropriate for you.

If your resources are not sufficient to cover yearly costs of $32,000 to $71,000 on top of expected medical and prescription drug costs, then consider buying long-term care insurance. You will need income today to cover the premiums, but it may mean you can live comfortably in your golden years.

Because long-term care policies contain a number of variables, such as length of coverage and limits on dollar amounts they will pay, buyers should compare policies carefully. In addition, Indiana is one of just four states that offer a special type of long-term care insurance called a partnership plan. You can learn more about it by visiting www.longtermcareinsurance.in.gov

Deborah M. Croxall
Financial Network
Investment Corp.

Long-term care health insurance should be part of your overall retirement planning and purchased in your late 40s or early 50s to protect your assets so that you can enjoy your "golden years."

The American Council of Life Insurers estimates that one out of two women and one out of three men who live past age 65 will need nursing home care. Even more of the aging population will need home health care. An increasing number of people ages 18 to 64 are using long-term care services.

Would you be able to pay $50,000 to $60,000 out-of-pocket today for a year of nursing home care? How would this devastating cost impact your retirement savings? Medicare will provide only limited financial assistance with long-term health-care needs.
If you needed home health care immediately, would you be able to pay $15 to $20 per hour to stay in your own home?

If you wait to age 70 to purchase long-term care health insurance, you will pay more in premiums over your life expectancy for the same benefits than you would if you purchased it at age 50, even though you would pay the premiums over a longer period.
Why wait until you are older and ill to purchase long-term care health insurance at a time when you may not qualify for coverage and may not have the assets to pay the premiums?

I ask my clients in their 50s to take a hard look at their financial situation and consider long-term care insurance as part of retirement planning.

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