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Long-Term care insurance basics

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Long-Term Care Insurance Basics

As we get older we get wiser, and likely a little less self-sufficient. As our youth wanes and our age put us over the hill, it’s crucial to consider long-term care insurance. Searching for long-term care insurance can be tricky considering the industry is in a state of flux. Our agents at Smallwood and Small don’t want to send you on the search alone, we’re here to educate you and guide you through long-term care insurance basics and ultimately, the purchasing process.

 Long-Term Care Insurance Basics: What is it?

According to AARP, long-term care insurance helps supplement the costs of care provided by nurses, therapists and other professionals as people are battling chronic illnesses and disabilities on a daily basis over an extended period of time.

 Long-Term Care Insurance Basics: What’s it cover?

Plans vary and circumstances can change, but long-term care insurance covers a variety of scenarios as we age. Here are the biggies:

  • Nursing home expenses (i.e. room and board)
  • Assisted living
  • Adult day care (i.e. provides health and social support services in supervised setting)
  • Home care (helps maintain individual’s grooming and housework)
  • Home modification (covers adaptations like installing ramps or grab bars)

 Long-Term Care Insurance Basics: Avoid these Mistakes

Purchasing policies shouldn’t be under-researched or purchased in haste. Be aware of these common mistakes when considering a long-term care insurance policy.

1.)Waiting too long to buy. The best time to start thinking about long-term care insurance is in your fifties, as premiums are more affordable and the coverage isn’t too difficult to obtain. Lots of people make the mistake of waiting into their sixties’. By then, insurance prices are likely too expensive or they don’t qualify for various health reasons. Dawn Helwig, a principal and consulting actuary at Seattle-based Milliman Inc. says that for each year an applicant in their fifties’ holds off on buying insurance, carriers raise premiums by three to four percent. And if they are in their sixties’, premiums are raised as much as six percent.

A general risk of waiting is one’s overall health deteriorating. According to the American Association for Long-Term Care Insurance, 25 percent of applicants’ ages 60-69 are rejected. So the moral of the story is this: the earlier you start making arrangements, the better.

2.) Looking at the price alone. While price is important, you don’t want to overlook reliability. It is recommended that potential buyers shop from a large, stable carrier that will continue to have reliable resources when it’s time to use the coverage. It’s better to limit your shopping to a bigger, diversified carrier with a good track record of paying out claims.

3.) Underestimating inflation. A key factor in obtaining long-term care insurance is making sure you have protection against inflation. If a 50-year-old person buys a policy, but doesn’t utilize it until they’re 80, the 30 years of inflation are going to affect the benefits. It’s important to note that buying inflation protection isn’t cheap; it can raise your premiums by 50 to 100 percent, but it’s worth doing. There are a ton of inflation protection plans, so it’s best to talk with the insurance provider (or a Smallwood and Small agent) about what options will work best for you.

4.) Forgetting to read the fine print. Read every single word on that policy agreement. It’s not unheard of to encounter claims denials that prevent or delay the collection of benefits. One simple way to avoid this is to familiarize yourself with all of the dirty details of the policy agreement; that way you will know when and how you can use the benefits. Don’t forget, just because you qualify for benefits, doesn’t mean that the insurer will pay claims right away. Familiarize yourself with the contract to ensure you receive the benefits when you need them.

 Don’t Do it Alone

It’s not glamorous but it’s necessary. Once it’s time to start looking for a policy, don’t do it alone, call us at Smallwood and Small. We have agents that are seasoned in the area of long-term care insurance basics and beyond. We’ll educate and guide you through the process, while securing the best deal. Give us a call at 304-263-3361 or visit our website, to get started.


Photo Credit: “Bromford” Licensed under CC BY 2.0.

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