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Long-term care insurance

Posted August 14, 2013 in Advice Column, Winterset

What is long-term care insurance? It is insurance that assists with payment of services provided for people unable to complete two or more “Activities of Daily Living” defined by most insurance companies as bathing, continence, dressing, eating, toileting and transferring.

Many people think that long-term care is provided exclusively in a nursing home. It can be, but it can also be provided in an adult day care center, an assisted living facility, or at home.

Should I buy long-term care insurance?
If you need long-term care services and have to pay to obtain them, what financial resources could you call on? Do you have enough to pay for four or more years in a nursing home, an assisted living facility or home health care? Generally speaking, if you have very little or no money when you need long-term care services, you might qualify for Medicaid. If you expect to be in that situation, you probably shouldn’t buy long-term care insurance. If you expect to have a lot of money when you need long-term care services, you also probably shouldn’t buy long-term care insurance. Instead, you should plan to pay for the care “out of pocket.” How much is a lot of money is subjective, but one financial advisor suggested if your net worth was in the range of $1.5 million, excluding the value of your home, you could safely skip buying long-term care insurance. If you fall between these two categories, owning long-term care insurance might benefit you. Like all other insurance coverages it offers peace-of-mind benefits as well as financial ones.

What’s the best age to buy long-term care insurance?
In general, it’s a good idea to buy long-term care insurance before you’re 60. The younger you are, the less likely it is that you’ll be rejected when you apply for the policy. Also, the younger you are, the lower the premium will be for a given set of benefits and features.  Once the premium is set, it stays at that amount for the life of the policy, unless the claims for the group of people who have bought that type of policy require that rates for the group be raised.

The decision to buy long-term care insurance is very important and one you shouldn’t make in a hurry. There are many types of policies with multiple additional benefits and options. Additional information is available at www.longtermcare.gov.

Information provided by Eric Johnson, Johnson Insurance, 1217 N. Sixth Ave., Suite 4, Winterset, 462-4553, eric.ji@q.com.

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