Purchasing Long Term Care Insurance

As the average life span continues to increase, so does the probability that one may at some point need in-home assistance or nursing home care. Federal government statistics indicate that as many as seventy percent of all Americans will require some sort of assisted care as they age. Such assisted living care may be necessary for many years and can be very costly, potentially wiping out assets that have been saved for the benefit of children and other heirs. Nursing home care can cost as much as $10,000 a month, an amount which is a heavy burden on any estate.

Long Term Care policies have undergone many improvements over the last 10 to 15 years. Now, policy options are readily available, but can be difficult to compare because of the many variables involved. At the most basic level, a Long Term Care Insurance policy provides a daily benefit up to a specified dollar amount for a specified period of time. For example, anticipating the daily cost of nursing home care at $350, an individual could purchase a policy with a $350 daily benefit for a period of five years for a maximum coverage amount of $638,750.

What are the variables in Long Term Car Insurance?
The basic equation for determining the benefit of a plan is simple, but variables to that benefit come into play, making a thorough plan comparison even more necessary to determine which policy is the best option. Some of these variables include:

• What type of care is covered? Some policies are more restrictive than others, although newer plans tend to cover care whether it is administered in the home or outside the home. Check to see which types of care are covered.

• Is an inflation rider offered? An inflation rider factors in the possibility that inflation will cause daily care costs to rise before the policy holder needs long term care. Inflation riders can provide for an increase in the daily benefit by a certain percent per year, calculated at either a compound or flat rate.

• Does the policy have an elimination period? Some long term care policies have a certain period of time before the policy will take effect called the elimination period. The later in life a policy is purchased, the more care should be paid to this provision of the policy.

• Does the company have a good claims history? As the Long Term Care Insurance industry has grown, some companies developed a habit of delaying or denying benefits. Check the claims history of all companies under consideration to see if they pay benefits promptly and reliably.

When should Long Term Care Insurance be purchased?
The younger an individual is when purchasing a Long Term Care policy, the lower the monthly cost will be. The benefit of purchasing early is that once a plan is purchased, the monthly premium cannot be increased as the policy holder ages. However, purchasing a plan too early, for example when in one's 30's does not make sense either due to the fact that the plan will not need to pay benefits for 40 or 50 years. Generally speaking, analysts recommend that those interested in Long Term Care insurance purchase a plan in sometime after the age of 50.

Integrating Long Term Care Insurance into an estate plan can provide additional options and peace of mind when faced with the need for assisted health care late in life. A knowledgeable estate planning attorney can advise on the best options on a case by case basis.

Bernard Krooks is a New York Elder Law and New York Estate Planning lawyer with offices in White Plains, Fishkill, and New York, New York. To learn more, visit Littmankrooks.com.