Long-Term Care Insurance BasicsPreparing for Long-Term Care

70% of those over the age of 65 will need some form of Long Term Care during their lifetime. This is compared to a 25% chance that you will be in a car accident on the The Most Dangerous Roads in your area or have a house fire. The difference is everyone keeps automotive and homeowner’s insurance to be prepared, whereas most people do not prepare for long-term care. There is a common misconception that Medicare will take care of such expenses, but it does not. That is where Long Term Care Insurance comes in. Learn what it covers, why you need it, and how to shop for a policy.

What is Long Term Care Insurance?

Long Term Care Insurance is a special kind of policy that will help cover certain long-term care expenses that you many incur. Typically, an LTCI policy covers:

  • Home Health Care: Getting help with bathing, grooming, and housekeeping.
  • Assisted Living: Apartment style accommodations that include assistance with personal care and meals.
  • Adult Day Care: A program that provides daytime health, social, and supportive activities in a supervised setting.
  • Respite Care: Provides temporary relief for family members, when they serve as the main caregivers.
  • Nursing Home: 24/7 facility that provides skilled health care, rehab, personal care, and daily actives.

To qualify for coverage, you have to lose the ability to perform at least two of six activities of daily living. The activities of daily living are bathing, caring for incontinence, dressing, eating, toileting, transferring yourself. When you make a claim that you can no longer do some of these activities the insurance company will review documents from your doctor and they may send you to be evaluated by a medical professional.

You will also be subject to an exclusion period.  This is a period of time you must be incapable of performing the above-stated actives before the insurer will start to pay. Typically, this time period will be around 90 days.

Why You Need Long Term Care Insurance

As stated in the introduction, Medicare does not cover long-term expenses. Medicaid will, but you must have very limited assets to qualify. Even then, there is a 5-year look-back period that prevents you from quickly spending down your assets to qualify. If you are not able to do this, you are left to pay for all of your own long-term care expenses.

In 2016, the average annual cost for a private room in a nursing home was $92,378. The average annual cost for a home health aide was $46,332. As you can see, those expenses can spend down your assets very quickly, leaving you and your heirs with nothing.

In exchange for a premium, a Long Term Care policy will cover those expenses when it becomes necessary. Thus, saving you a lot of money in the long run. Your policy will also provide you with a higher level of care than Medicaid would.

Purchasing an LTCI Policy

If you find that an LTCI policy may be just what you need, you may be wondering where to start looking. The best place to start is with a local insurance agent that represents several different insurance companies. This will give you a chance to compare several different companies’ prices at the same time.

You will want to find out how long each policy’s exclusion period is, what capacities you must lose to qualify for coverage, and how many years you will be covered for. A qualified insurance agent will be able to explain all aspects of the policy to you in depth so you have a complete understanding of how Long Term Care Insurance works.


The younger you are when you purchase LTCI, the cheaper it will be. Do not put off purchasing your policy. Start looking today to save yourself both money in premiums, as well as in long-term care expenses.

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