Most people don’t like to think about aging and having to rely on someone else to help them do simple everyday activities. However, there is a 70% chance that after age 65, one will need some type of long term care services and about 35% of those people will need long term care (LTC) in a nursing home. Conversely, only about 7.2 million out of 52 million Americans have long-term care insurance. 

Long-term care (LTC) insurance is for when you can no longer independently perform two out of the following six activities – referred to as Activities of Daily Living (ADLs):

• Showering/Bathing
• Dressing
• Personal Hygiene
• Eating
• Using the Bathroom
• Mobility (getting out of a bed or a chair, walking around)

You can use your LTC policy when the insurance company reviews a claim and has “approved” your medical documents and plan for future care. There is often an “elimination period” of 30, 60 or 90 days during which you will need to pay out of pocket before your policy will be in effect.

Some FAQs about LTC insurance

When should I start looking for an LTC policy?

According to AARP, one should begin pricing LTC policies in your early 50s or 60s. This way, you can minimize the risks of higher premiums or (potentially) stricter rules in the future.

On what are LTC premiums based?

What determines premiums are your age, the number of days before coverage begins, the amount of daily benefit, and inflation protection. Also, a policy for a woman often costs less than one for a man.

How do I determine if an LTC policy is a fair price?

Ask an LTC insurance representative, “How many insurance companies are they appointed to sell?” If they only represent one company, then their sales pitch will be biased. Your most knowledgeable representative is one who has four to six LTC providers. They will have a broader range of investment costs. You should also ask about any discounts available, as this too can make a significant difference in the price.

A rule of thumb acknowledged by consumer and financial experts: LTC insurance is a bad idea unless the monthly premium is 5% or less of your monthly income. When calculating this 5% amount for future years, keep in mind that your premiums are apt to rise, while your income will probably drop.

Find out which ones are “tax-qualified” long-term care insurance policies. A tax-qualified plan may allow you to deduct part or all of your premium on your federal taxes.

Ultimately, costs will vary based on your age, physical condition, a single or shared policy, and what needs you anticipate having.

Are there ways to lessen the cost of LTC?

You can lower the cost by opting for a shorter (three to five years) benefit period, sharing a policy if needed and reducing the number of daily benefits. Experts believe that you should not try to save money on inflation protection because it can raise your premiums significantly. After all, you may purchase a policy in your 60s and not need it for 15-20 more years.

Should everyone have LTC insurance?

While it would be nice if everyone had it, it doesn’t mean they will. Typically, those with limited funds and those with significant financial assets will forgo LTC. Those in the middle are generally willing to spend a certain amount of their savings on a long-term care policy and then implement other strategies to fill in the gaps.

Whether or not you purchase a long-term care policy, it’s always a good idea to start planning for a more healthy, comfortable future.