Explaining Long Term Care Insurance Costs to the Non-Believers
Long term care insurance costs are intimidating to many Americans since they represents another expense to pay on top of bills, health insurance, life insurance, taxes, and more. What makes it all the more unappealing is that, on top of being far from the cheap side, it’s also contingent only in the case that you’ll indeed require long term care in the future.
Long term care insurance costs are intimidating to many Americans since they represents another expense to pay on top of bills, health insurance, life insurance, taxes, and more. What makes it all the more unappealing is that, on top of being far from the cheap side, it’s also contingent only in the case that you’ll indeed require long term care in the future. What if you don’t require in-home care or nursing services later? The money you spent paying for your premiums would seem like it’s gone to waste.
What these naysayers fail to realize is that the longer you live, the more likely you’ll require LTC services. In fact, it’s almost a certainty. Even if you somehow manage to avoid any major sicknesses or evade injuries and disabilities, every year, your overall health declines slowly, and it’s only a matter of time before you will need assistance even in just your day to day activities.
Understanding the real costs
The real costs of actual long term care services are huge in comparison to the costs of insurance. Today, staying in a nursing home for a year means shelling out an average of $70,000, with some going above to hundreds of thousands for finer private rooms. Studies have shown that the average stay in a home has increased to three years, and if you do the calculation, you’ll see that paying for this out of pocket would take a big bite out of your savings.
There are also some people who put off getting their policy later, when they are actually nearing the age where they’ll need LTC. Though this means paying your premium for a shorter period of time, those premiums will actually be higher, and you could have saved up a lot more by acquiring a policy several years ago at a lower rate.
Saving on costs
According to ACSIA1, long term care insurance costs are affordable, and can be adjusted depending on your needs, budget, and other preferences. The number one method to save on your policy is to buy one while you’re still young. Those who purchase a plan while at their 50s will find their premiums to be significantly lower than if they bought at 65. Moreover, you can get an even bigger discount since you’ll be healthy and at the prime of your health during that time. And another pleasant surprise is that your maximum benefit will surely grow and be much larger over time.
Your current health at the time you apply is critical in determining the price of your premiums. Insurance companies issue higher rates for those who have medical conditions and those who are at risk of requiring more intensive care in the future. This means that you shouldn’t wait until you’re suffering from symptoms of sicknesses that would require care before purchasing your plan, as this would definitely result in higher premiums or even make you uninsurable.
Having a policy in place that you would be ready to benefit from in the future is worth so much more than the long term care insurance costs that you’ve paid for over the years. Secure your old age knowing that you’ll be taken care of when the time comes.
A tale likely to happen
Here’s a cautionary tale for those who do not believe in the necessity for a separate and comprehensive LTC policy:
John, a 55-year-old manager, looks up the costs of an LTC policy in his area. He has just been to the doctor and was told to he was symptom-free. He decides to cut down on his premiums by getting coverage only for in-home assistance, figuring he will be healthy enough to avoid nursing facilities.
So when his benefit triggers a few decades later, he finds himself taking out funds from his savings and from selling his assets to pay for expensive medications and therapy, as he suddenly had a mild stroke a few years ago. With coverage only for in-home care, he has to pay for unanticipated expenses out of pocket, and is in danger of losing his nest egg.
A story similar to this has been common enough in today’s retirees. Underestimating the effects of medical inflation to the costs of care in the future is one mistake you shouldn’t make, and it’s very probable that they would become exorbitant by the time you require LTC.
Avoiding future risks3
Your financial stability today should be all the more reason to get as much LTC coverage as you can afford, not less. While you are at the peak of your productivity, planning and preparing for future unforeseen eventualities will pay back tenfold once they do transpire. This kind of readiness would be a blessing of foresight decades later when you find yourself needing it.
You don’t need to make a hasty decision when acquiring your policy. Take time to review long term care quotes2 thoroughly, and with a financial and health advisor if possible, to get the most out of your policy.
(long term care / shutterstock)
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