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If for your mother, read the fine print that says when the policy will become active. Some policies only become active two years after signing up. Some policies will only give out 2 or 3 years of payments, or stop when the maximum was used. Here's another good read on LTC policies www.kiplinger.com/retirement/long-term-care-insurance/things-you-should-know-about-long-term-care-insurance
My only experience with LTC was my boss, who was 85 years old at the time (he could run circles around anyone 20 years younger) who every year would grumble about the annual policy cost. His last payment was over $6,000. He never got to use his LTC policy as he died during covid in 2020 and was gone within a week. Now, if he would have put all those policy premium costs into an investment, he probably would have had more money when the time came to use it for long term health care, or would have passed onto his heirs when he passed.
If you read this article you will find that at 65/female the average cost of a LTC policy will be about $5k per year. The older you are when you buy the policy beyond 65, the premium price goes up exponentially.
Nerdwallet.com has some good articles about LTC.
Another good resource is Bogleheads.org, which is a public forum much like this one. Ask your question there.
Imo, you're best off getting the details directly from the insurance co and going from there.
It is CRUCIAL to read all the fine print as they are tricky and getting trickier. For instance some policies demand that there be an RN presence in the facility. Guess what, there never is. There may be one on call, checking medication orders, but that's it.
These policies get more and more expensive as you age and are nearer to needing them.
Sometimes these policies preclude your getting needed care help from the government as they provide a monthly stipend that raises your monthly income but that at the same time is not enough to cover your care.
There are many who love LTC. I am not myself a fan. But it's a decision I hope you will discuss with a good financial planner.
As to LTC, be very very careful. I would say the same thing about reverse mortgages. For some they are truly a godsend and they worked well for my own MIL. For others, not good. It is up to you, after all the information you can gather, to try to make your own best decision.
The already high premiums took a big jump a couple of years ago. The company offered a cash buyout for an amount that wouldn't cover even one year in a care facility. We didn't take it but are now grappling with truly jaw-dropping annual premiums. Seems like a "Catch 22" situation.
There is a somewhat newer approach to doing LTC Insurance and that is a “hybrid” policy that can be used for both as LTC Insurance & as Life Insurance (permanent life insurance not Term). If I’m not mistaken, it’s a buy-in, so to get the underwriting done it will be an in full upfront initial payment. Like $200,000 or more. Tends to be done by those getting a huge lump sum payment upon retirement or company downsizing, so they have six figures to do a hybrid without affecting their regular living expenses. New York Life underwrites these.
1. Understand the Daily Benefit Amount.
Determine how much the policy will pay per day (or month) for care. Compare this to the current cost of care in your area (e.g., nursing home, assisted living, or in home care). The daily or monthly benefit should closely match local care costs.
2. Benefit Period.
Consider how long the policy will provide benefits. (e.g., three years, five years, or unlimited). Multiply the daily benefit by the length of time to assess total potential payouts.
3. Inflation Protection
Policies with inflation protection will increase the daily benefit over time, keeping up with rising care costs. This is critical, especially if you anticipate needing care many years from now.
4. Elimination Period
The elimination period is the waiting time before benefits begin (typically 30 to 90 days). A longer elimination period means lower premiums but requires you to pay out of pocket initially.
5. Coverage for Different Levels of Care
Ensure the policy covers a broad spectrum of services (e.g., home care, assisted living, nursing home care). The more comprehensive the coverage, the better the value.
6. Premium Stability
Research the insurance company’s history of raising premiums. Some companies increase premiums over time, which can make policies less affordable in the future. You might want to consult an independent insurance agent or financial advisor to analyze this.
7. Financial Ratings of the Insurer
Verify the insurer’s financial stability through ratings from agencies like A.M. Best or Moody’s. A company with a strong rating is more likely to honor claims years down the road.
8. Compare Multiple Quotes
Use independent brokers or online comparison tools to gather quotes from various companies. This ensures you’re getting the best deal without relying solely on one company’s customer service.
9. Policy Exclusions and Conditions
Carefully read through exclusions and conditions under which benefits won’t be paid. Make sure you’re comfortable with the terms before signing.
By taking these steps, you can independently evaluate the policy’s value without relying heavily on potentially unreliable customer service. Consulting a financial planner specializing in long term care can also be invaluable for an unbiased perspective.