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Long-Term Care Insurance

Long-term care insurance provides health coverage for care or assistance in a nursing facility or in a home or community environment. It is a relatively new type of insurance offering another way you may pay for long-term care and coverage. Whether you should buy long-term care insurance will depend on:

  • Age
  • Health status
  • Overall retirement goals
  • Income and assets

It is difficult to know when and how long you will need long-term care. Try reviewing the following factors to determine whether or not you should purchase long-term care insurance.

Reasons you shouldn't buy long-term care insurance:

  • Not able to afford premiums (premium is more than 7% of income)
  • Have limited assets (under $50,000)
    Social Security Benefit or Supplemental Security Income (SSI) is the only source of income
  • It is difficult to pay for bills and other important needs

Reasons you should buy long-term care insurance:

  • To protect assets and income
  • To stay independent of financial support from others
  • To maintain options in selecting types and place of care
  • To have "peace of mind" that if you need long-term care you are covered

You may want to consider buying long-term care insurance if there is a family history of chronic illness such as:

  • Arthritis
  • Alzheimer's Disease
  • Stroke
  • Dementia
  • Parkinson's Disease

It is a good idea to consider long-term care insurance during pre-retirement planning. Just like life insurance, you are more likely to qualify for better rates when you are younger and in better health before you actually need it.

Closely review your options, needs and resources to help determine whether long-term care insurance is right for you. If it is, remember that insurance companies sell policies that combine benefits and coverage in different ways.

Benefit Triggers - ADLs and cognitive disorder are considered types of "benefit triggers," the term used to describe the factors that qualify a person for eligibility of benefits. This is an important part of a long-term care insurance policy. The policy usually outlines the benefit triggers.

Types of Benefit Triggers

  • Activities of Daily Living (ADLs) - The patient cannot perform 2-3 of the following activities: bathing, eating, continence, dressing, toileting and the ability to transfer oneself in and out of bed, chair or wheelchair.
  • Cognitive Impairment - the policy usually pays benefits when there is loss of mental functions.
  • Doctor Certification - when a doctor gives orders or certifies that care is medically necessary.
  • Prior Hospitalization - a hospital stay may be required before benefits are paid.

Different policies may use different benefit triggers. Some states require certain benefit triggers. Check with your state insurance department to find out what your state requires.

Seniors who need long term care also sometimes explore assisted living communities around the country. California assisted living and Arizona are popular options among seniors.

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