Long Term Care Insurance
What is Long Term Care (LTC) Insurance?
Long Term Care Insurance (or LTC Insurance) is coverage that provides money to help pay for your care at home, in assisted living, adult daycare, or in a nursing home if you suffer from a disabling condition (a chronic medical or cognitive condition) that requires you to be under constant supervision.
Without Long Term Care insurance people must utilize their personal savings, retirement savings and Social Security benefits to pay for needed care. This can deplete individuals’ or families’ life savings faster than many realize. In that case Medicaid (the Federal / State
program that helps pay for medical expenses for Americans with limited financial resources) steps in to pay for long term care. But Medicaid usually only pays for long term care in a nursing home the Medicaid chooses.
Purchasing Long Term Care insurance not only helps you pay for long term care, it allows you to make the decisions about your care. With a strong LTC Insurance policy you get to decide if care will be offered to you in your own home (either professional care or family help), in an assisted living facility, or if needed, a nursing home.
Who Needs Long Term Care Insurance?
Anyone could experience a medical or cognitive issue in the future that would necessitate there need for long term care.
Concentrating on people age 65 or older, sixty-nine percent (69%) will need long term care at some point in their lifetimes. Men experience the need fifty-eight percent (58%) of the time, and the percentage for women is much higher, at seventy-nine percent (79%). In our work we see the need for individuals and couples in these three broad categories with the most need for LTC Insurance:
Those who would suffer a loss of most of their savings if paying out of pocket for long term care.
Most of us are working to fund our family budget and put aside monies for our retirement years. Contributing to our retirement savings account now will fund our daily expenses after we retire.
But it is tough to save monies to fully fund all of the “what if” scenarios in our retirement years.
Purchasing Long Term Care Insurance is a way to fully or partially fund the cost of long term care if needed, so that our family budget in retirement can continue without a loss to quality of life for our spouse or partner.
Those who feel they can self-insure, but would rather their savings go to their family and other interests.
Some individuals and families feel their net worth would allow them to “self-insure” the cost of long term care if one or both spouses needed care. Especially long term care of a short duration.
But what if long term care was needed for many years? Year after year of paying those costs can erode anyone’s assets.
Purchasing Long Term Care Insurance is a way to prevent this scenario, ensuring those assets are given to your spouse, children, grandchildren, a charity, etc. instead of to costs for your care.
Those who are business owners, entrepreneurs, self-employed, consultants, 1099 employee, etc.
Business owners have no choice but to live the “do it yourself” mantra, as all the financial decisions of their family and business rest on them.
The “busyness” of business ownership means there is little time to think of protecting yourself in the future (that time is usually spent how to care for your business and your employees!).
Purchasing Long Term Care Insurance is an important step in ensuring business owners will be able to enjoy the fruits of their labors in retirement, without worry about how to pay for long term care.
Types of Long Term Care (LTC) Insurance
Traditional
Traditional long term care insurance polices focus solely on benefits needed for your long term care costs, without any life insurance benefit components.
These policies offer a set amount of money or “benefit” each month to help pay for long term care at (depending on the policy) home, in assisted living centers, or for 24 hour nursing care.
Though older policies may have no benefit maximum, current policies do set a benefit maximum, to control premium costs and make the policies sustainable amid increasing long term care costs.
Partnership
Partnership policies build on traditional LTC insurance in the form of a government / insurance industry partnership that allows for purchasers of this coverage to keep more of their own money before Medicaid spend down rules kick in.
Partnership LTC Insurance allows the insured, if after utilizing all of the benefits of their LTC policy, then paying for long term care expenses out of their own savings, to move to Medicaid paying for their long term care sooner.
This allows the insured to keep an amount of savings equal to the benefits of the policy (for ex., $500,000) before Medicaid steps in and pays, instead of having to exhaust almost all of your savings.
Hybrid
Hybrid policies are one product with a “hybrid mix” of life and long term care insurance combined into one insurance policy.
These are permanent life insurance polices that build cash value over time. Then according to the specifics of the policy, the insured can choose from both long term care insurance and life insurance benefits.
These hybrid policies are appealing in that many people shopping for these life and long term care polices have a need for both coverages.
Rider
Long term care riders that you will hear called “accelerated benefits” or “living benefits” riders are offered by many life insurance companies as an optional add on. These riders offer a percentage of the death benefit of the policy to pay for long term care expenses while living if the insured meets the definition of not being able to perform 2 of the activities of daily living (ADLs)
A policy example we use a lot are universal life policies without cash value. If you were to choose a $1 million death benefit, you would be able to utilize up to $500,000 of the benefit while living, for long term care expenses.
Key Figures:
70%
Those turning 65 today have a nearly 70 percent chance of needing some type of long-term care services as they age.
20%
24 percent of people turning age 65 who will require paid long-term care for more than five years in their lifetime.
49%
49 percent of current nursing home residents have a diagnosis of Alzheimer’s disease or another form of dementia.
We Work with Many Insurers Offering Long Term Care Insurance, Including:
Free Long Term Care (LTC) Insurance Quote and Information
Complete the below form (designed to take you 2-3 minutes) and submit below. We'll send you a free quote of long term care insurance coverage tailored to your coverage needs! You may also call us for a quote, or with your questions, (919) 357-6637.
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Theresa and Joe’s Long Term Care Insurance Story
“If we didn’t have this insurance, caring for Joe would have depleted all the savings we had,” Theresa says. “Now I’m not afraid of running out of money.”
The first time that James Daoust, Jr. visited his clients, Joe and Theresa Mollicone, the couple rolled out a tray of cannolis. James became their insurance professional and over the next three decades sampled countless Italian specialties in the couple’s home. “He got hooked on Italian desserts,” Theresa says.
In the early years, James had helped the Mollicones with many kinds of insurance, all of which they had to address on their own because each was self-employed. Joe owned an excavation business, and Theresa ran a clothing boutique.
As Joe approached his 65th birthday and his disability insurance was about to expire, James suggested Long Term Care Insurance. The Mollicones were initially hesitant, but neither wanted to be a burden to the other or to their two adult children, so they purchased policies.
Less than six months later, Joe suffered a massive stroke that left him paralyzed on the right side and unable to speak. Three months after the stroke, the long-term care insurance policy started paying the maximum daily benefit and has been just enough to cover the cost of caring for Joe in their home.
Four years later Joe reached his payout limit, but continues to receive benefits because of his policy’s shared-care rider, which allows him to tap into the benefits from Theresa’s policy. To date, the insurance company has paid out more than $400,000 in benefits.
“If we didn’t have this insurance, caring for Joe would have depleted all the savings we had,” Theresa says. “Now I’m not afraid of running out of money.”