Are You Too Young for Long-Term Care Insurance?
The easy answer is probably not! After all, you can worry about getting older in your 20s or you can suffer the consequences of that lack of foresight in your 60s. Let’s face it, the younger we are the less we think about what’s going to happen to us during or nearing retirement. However, this may be a silly risk and one not worth taking.
The fact of the matter is that LTC insurance is something that nearly all of us are going to need. Whether we spend our later years in a nursing home, an assisted-living facility or live them out in our own home, we are probably going to need some sort of care.
What long-term care covers:
Long-term care insurance is specifically designed to fill in the gaps between what your care costs and what is actually available to pay for those costs. Keep in mind that Medicaid is probably going to pay a small fixed amount for your care and unless you have very limited assets, you may be ineligible for coverage for your care.
Who needs long-term care insurance?
Chances are if you are in your 20s or 30s, the last thing on your mind is worrying about long-term care as you approach your 70s or 80s. You can worry about it now, or you can worry about it as you approach your 50s and 60s though you will probably pay a lot more in out of pocket expenses if you wait. While you may be in great health today and not thinking about potential medical costs you may incur in the future, today is the time to consider long-term care insurance. Some of the factors that may impact your decision include:
- Family longevity – if your family has a history of living until a very old age, you may need to consider long-term insurance to protect your assets and provide for your care
- If you are female – overall, women tend to live longer than men meaning they are more likely to need long-term care
- Health of family – those who have family members who have suffered from heart disease, cancer or diabetes are more likely to require long-term care
- Singles – if you do not have children, you probably will require a third-party to provide care as you age
Cost considerations
While it is true that your age will have an impact on what you pay for long-term care insurance, there are other factors that will impact the cost including:
- Elimination periods – the younger you are, the elimination period can be longer. This is the amount of time required by the insurer before benefits will be paid for care.
- Benefit limits – daily, weekly and monthly benefit limits are another way of controlling the overall cost of a policy. Whether you use the basic nursing home care costs or the costs of getting care at home will determine what limits you will be subject to.
Pay attention to exclusions
Most long-term care policies have certain limitations including:
- Addiction – when you require long-term care for drug or alcohol addiction, long-term care policies may not be the right option.
- Mental health – many policies have mental health exclusions but will include long-term schizophrenia or Alzheimer’s provided you are not already suffering from Alzheimer’s.
- Family care – most policies will not pay if your family will be caring for you
Long-term care insurance is a safety net. These policies can protect your retirement income and your assets. While they may not be right for everyone, you will not know that unless you evaluate these policies today. It is important to carefully evaluate exclusions and benefit limits to ensure you get the policy that is right for your individual needs.
