Long Term Care Insurance

Long term care insurance is a type of insurance that offers protection against the financial risk associated with the burden of paying for long term care, defined generally as custodial care which is not provided in a hospital.  The original long term care insurance policies paid only for care that that was provided in a nursing home.  Modern policies offer the additional option of coverage for various types of home health care and, in some instances, for the cost of care provided in assisted living facilities.  The inclusion of these optional coverages seems wise and advantageous, because almost everyone, given a choice, would prefer to remain in their home and be cared for there, with institutionalization being a “last resort” only if home care is not available.  If you decide against home health care coverage, that decision may result in your being placed into a nursing home sooner that if such coverage were available.   The uninsured cost of home health care may soon become prohibitive.

Policies vary with regard to the events or circumstances necessary for benefits to become available in a given set of circumstances.  Most generally, benefits become available for covered care if the insured becomes unable to perform, without need of assistance, two or more “activities of daily living” (eating, dressing, bathing or showering, toileting, and transferring), or if an attending doctor issues a “statement of medical necessity.”

Most long term care insurance policies are “stated benefit” policies.  In applying for coverage, you select the amount of benefit the policy will pay when coverage applies.  This is most often shown as a daily benefit amount, or sometimes monthly.  As explained below, there are several factors you should consider in selecting a benefit amount.

One important decision in choosing a benefit amount is the projected cost of the care you may need.  Nursing home and in-home care costs can vary substantially from community to community, even within the same metropolitan area.  Further, a large part of what a nursing home is furnishing is accommodations, which can range from “economy” to “luxury,” just as in the case of homes and hotels.  In choosing a benefit amount, you would be wise to inquire about local nursing home prices, and to visit some facilities.  Such visits are very helpful toward determining the cost of the level of care that you may be comfortable with, and that is valuable information to have in deciding how much of an insurance benefit to purchase.

Obviously, there are many things to take into consideration in selecting a long term care insurance policy.  You will be wise to enlist the assistance of an insurance professional who is well-versed in long term care insurance.  You will also want to compare several options.  In some instances that can be done through one insurance professional who is licensed to represent multiple insurance companies.  In dealing with an insurance professional, you should inquire of that person what long term care insurance companies he or she is licensed with.