Long Term Care

There’s a good chance you’ll need long-term care as you age. But if you’re like many Americans, you don’t have a plan to pay for such care and it can be very expensive.

Although about half of adults turning 65 today will develop a disability that is serious enough to require assistance with daily activities of living, only 11% have long-term care insurance coverage that will help pay for the cost of care. Often, people don’t recognize the need for this sort of coverage because they underestimate the cost of care. And they mistakenly assume that Medicare and health insurance will cover long-term care.

While the cost of long-term care insurance can be a deterrent to getting coverage the real issue is the cost of care itself. The premium you pay is a fraction of what the actual cost of care will set you back.

The idea of paying premiums for coverage you might not need leaves a bad taste in people’s mouths. But there is an alternative to use-it-or-lose-it traditional long-term care insurance. Hybrid life insurance products provide long-term care coverage if there is a need, or a death benefit if the policy isn’t used to pay for care.

If you’re wondering why you even need to bother with insurance to help pay for long-term care, consider the cost of care. The median monthly cost of an assisted living facility is $4,051 in 2020.

If you want to receive care in the comfort of your home, the median monthly cost of a home health aide is $4,385. The median cost of a private room in a skilled nursing facility is $8,517 a month. It is estimated that these costs will almost double over the next 20 years.

How Insurance Can Help

Long-term care insurance can be used to pay for assistance when the policyholder can’t perform two of the six activities of daily living or has cognitive impairment. It covers the cost of care at home, in adult day care, in assisted living facilities and skilled nursing facilities.

Most long-term care policies also will cover modifications to your home to make it easier to remain there to receive care. The amount of coverage a policy will pay will depend on the benefit period and benefit amount you choose. A typical benefit period policyholders choose is three years. And a typical plan pays out $3,500 to $5,000 a month in benefits. The maximum benefit is then based on the monthly benefit amount and benefit period. For example, a long-term care policy with a $5,000 monthly benefit and a three-year benefit period would have a maximum benefit of $180,000.

Depending on how long you need care and how much it costs, long-term care insurance can help cover some or even all of the cost of care. So if you’re in your 50s now and will need care in your 70s, you might have to spend $100,000 to $200,000 a year. For those who need a high level of care, the average length of care is 3.9 years. If you fall into that category, your care could cost you several hundred thousand dollars.

Hybrid Insurance Solves the Use-It-or-Lose-It Problem

Life insurance policies that include a long-term care benefit eliminate the concern about paying for coverage you may never use. They can be used to pay for long-term care expenses and will pay a death benefit when the insured person dies. That’s why these hybrid policies have become more popular than traditional long-term care insurance.

The 2020 Insurance Barometer study conducted by Life Happens and LIMRA found that the top reasons people buy combination life products is to be economical with their resources, to alleviate anxiety over long-term care expenses, and to avoid the expense of two policies.
The best way to secure the right coverage for your situation is to speak with one of our experts. Shopping for long term care is a bit more difficult than our usual online shop and apply approach.