5 Long-Term Care Insurance Facts

Over 50% of people turning 65 will need long-term care at some point – are you ready?

Unfortunately, many retirees aren’t prepared for the realities of long-term care: we’ve put together these important facts to help you get ready for your own retirement.

Women may be more likely to need it

 Women live longer than men on average, and they also have higher rates of disability. The implication is that older women may be more likely to need long-term care – one survey put the chances at 58% for women compared to 47% for men.

What’s more, women who access long-term care may need it for longer: women spend an average of 2.5 years in long-term care, while the average for men is 1.5 years.

This makes a long-term care plan all the more important.

Getting coverage isn’t always a sure thing

Once you have coverage, you have it (as long as you pay your premiums). But getting long-term care coverage can be tricky. If you have Alzheimer’s Disease, MS, Parkinson’s, dementia, or have experienced a stroke, you might find that you can’t get it. This could also apply to any number of additional health problems or risk factors.

In fact, 15% to 20% of people who apply for long-term care insurance are denied outright.

That’s why it can be beneficial to start your long-term care planning early. Even if you choose to forego coverage, having a plan in place is important – the last thing you want is to desperately want or need coverage and not be able to obtain it.


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You might not get your benefits right away

One surprising issue that many people encounter is not receiving benefits as rapidly as you might expect. Insurers may decide to conduct an independent assessment as to whether there is a real need for long-term care, or you might need to meet a “benefits trigger” before benefits are provided.

This can leave patients who really do need help in a lurch, at least for the short run. Be sure to evaluate the benefit thresholds prior to purchasing a long-term care policy. Emergency funds (or even savings earmarked for medical expenses) can also be beneficial to covering backstops while awaiting reimbursement from your insurer.

Your costs are not guaranteed

While your insurer can’t drop coverage or single you out for a higher-cost premium, it is entitled to raise premiums across policies. In some cases, premium costs have doubled in the space of a couple of years. The result can be a difficult trade-off decision between overall coverage and everyday affordability.

That means it might be prudent to plan ahead for rising premiums over time – it’s common for them to go up, especially when there’s solid and rising demand for long-term care services.

If you’re thinking about scaling back coverage, it’s important to take an objective view of what services you might need (though this is obviously difficult to anticipate), where you might need professional as opposed to family support, and what the impact of your coverage could have on your retirement budget and asset base.

There are alternatives to standard LTC policies

 Because both insurers and policyholders have struggled with the complexities of standard long-term care policies, new forms of long-term care coverage have emerged.

For example, some life insurance policies and even annuities can come with an optional long-term care rider, which provides coverage in the event that you need to access services. These can be preferable for those who don’t want to spend money on a standalone policy that might not be needed. You can also self-insure with savings in a Health Savings Account (if you have a high-deductible insurance plan) or other financial savings or assets.

In any situation, it’s important to weigh up the costs and benefits of each strategy. With self-insurance, we also recommend making projections that account for inflation and the rising cost of health care services across the board.

Before buying any insurance product, it is prudent to consider the suitability of the policy for your individual financial situation. A financial advisor who provides specialized insurance strategies can help you navigate the process.

Are you confused about other types of insurance, too?

Insurance can be a confusing subject, especially if you’re not familiar with the language of policies and plans. For help with one common area of confusion, download our free introduction to life insurance, Life Insurance Basics, and get up to speed on what you need to know about common life insurance plans.


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Let Us Help!

We can discuss this topic and more at a complimentary appointment. As a bay area retirement planning coaches, we can give you a review and make suggestions based on your retirement objectives.

Important Disclosures

The opinions voiced in this article are for general information only. They are not intended to provide specific advice or recommendations for any individual and do not constitute an endorsement by United Planners.

To determine which investments may be appropriate for you, consult with your financial professional. Please remember that investment decisions should be based on an individual’s goals, time horizon, and tolerance for risk. Neither diversification nor asset allocation can ensure a profit or prevention of loss in times of declining values. United Planners does not render tax advice.

Securities and advisory services offered through United Planners Financial Services, member FINRA, SIPC. Pasquale Vitucci, CA Insurance Lic. # 0758212, is an Endorsed Agent of Vitucci & Associates Insurance Services CA Insurance Lic. # 0I06319. Vitucci & Associates Insurance Services and United Planners are separate and unrelated companies.
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Further Reading

Long-term care, women vs. men: https://www.aarp.org/content/dam/aarp/ppi/2017-01/Fact%20Sheet%20Long-Term%20Support%20and%20Services.pdf

Long-term care and pre-existing conditions: http://www.aplaceformom.com/senior-care-resources/articles/long-term-care-costs and http://www.daughterhood.org/6-features-of-long-term-care-insurance-youd-never-guess-but-need-to-know/

Benefits triggers: http://www.aarp.org/health/health-insurance/info-06-2012/understanding-long-term-care-insurance.html

Rising premiums: https://www.cbsnews.com/news/the-ever-rising-cost-of-long-term-care-insurance/

Alternatives to long-term care insurance: https://money.usnews.com/money/personal-finance/articles/2016-03-10/why-no-one-can-afford-long-term-care-insurance-and-what-to-use-instead and https://www.naela.org/NewsJournalOnline/News_Articles/2018/JanFebMar2018/LTC.aspx