Thinking of buying long-term care insurance? Consider these costs – InsuranceNewsNet

InsuranceNewsNet — Your Industry. One Source.™

Sign in
  • Subscribe
  • About
  • Advertise
  • Contact
Home Now reading Newswires
Topics
    • Life Insurance News
    • Annuity News
    • Health/Employee Benefits
    • Property and Casualty
    • Advisor News
    • Washington Wire
    • Regulation News
    • Sponsored Articles
    • Monthly Focus
  • INN Exclusives
  • NewsWires
  • Magazine
  • Webinars
  • Free Newsletters
Sign in or register to be an INNsider.
  • Exclusives
  • NewsWires
  • Magazine
  • Webinars
  • Free Newsletters
  • Insider Pro
  • About
  • Advertise
  • Editorial Staff
  • Contact
  • Newsletters

Get Social

  • Facebook
  • Twitter
  • LinkedIn
Newswires
Newswires RSS Get our newsletter
Order Prints
November 6, 2017 Newswires No comments
Share
Share
Tweet
Email

Thinking of buying long-term care insurance? Consider these costs

Chicago Tribune (IL)

Nov. 06--Health care costs are rising rapidly, and for older adults or people who need help with some daily activities, costs can easily run thousands of dollars.

A 2015 cost of care survey from insurance company Genworth Financial estimated the national median cost of care for a home health aide is $45,760 annually, while the national median cost for a private nursing room home is $91,250 annually.

With costs like that, some people are turning to long-term care insurance to cover these bills. People who are considering purchasing this insurance should know it's costly, is very complex and not everyone will qualify. We hit some key points that potential buyers should keep in mind.

Related stories

  • Patent Issued for Data security across data residency restriction boundaries (USPTO 11552955): Kyndryl Inc.
  • Patent Issued for Complex composite tokens (USPTO 11553352): eBay Inc.

Talk to professionals. Financial planner Lacey Manning, founder of LTG Financial in Ocala, Fla., said people should speak to an estate planner, elder law attorneys and accountants to see if these policies make financial sense. They can look at a person's assets and any other coverage he or she may have from Medicare, Medicaid and other state and federal programs designed to support the sick and elderly.

The reason many people opt for these policies is that they have some financial assets they want to bequeath rather than use that money in case they are sick, said Martin Grace, the Harry Cochran professor of risk at Temple University.

For people without a lot of assets, these policies are too costly, said Mary Alice Hughes, insurance agent at Insurance Advantage & LMA Financial Services in Jacksonville, Ark. People who own a home and have more than $250,000 in other assets can better afford these policies.

"If you only have $200,000 in the bank, then you don't need long-term care insurance because ... the premiums are going to eat into that money," Hughes said.

Costs. These policies are not cheap, but they are less expensive for younger and healthier people. Grace and Hughes said the cheapest options are for people in their 40s without any significant illnesses. Policies are designed so that buyers purchase a set amount of benefit for certain time frame. Most policies allow buyers access to a pool of money for three or four years.

For example, a healthy person in her 40s may buy a policy with a $7,000 monthly benefit for 48 months (four years), which gives her access to a total of $336,000. This type of policy costs anywhere from $200 to $225 a month, about $2,500 a year, Hughes said. Buyers can add riders, such as inflation protection, so that their benefits grow by 4 percent to keep up with the cost of living.

The premiums can go up significantly as people age, Grace said, which is why someone buying a policy in their 40s will spend less than someone in their 50s or 60s.

"The premiums almost double from your 40s to your 50s to your 60s. It's really substantial," Grace said, adding that he recently bought a policy himself and went through this process.

Because premiums can rise, the buyer needs to think about whether he will have future assets to cover premium increases, Hughes said. Some policies have optional nonforfeiture riders buyers can purchase that will protect what they paid for if they no longer can afford the premiums.

"They don't get the money back, but they just are assured they can use what they have paid," Hughes said.

These policies require medical underwriting, Grace and Hughes said, and having illnesses will increase the cost.

"There are a lot of situations where ... the agent won't even take an application. Cognitive impairment -- dementia, Parkinson's, Alzheimer's -- will definitely knock you out," Hughes said.

What they cover. Long-term care policies don't last forever. They last as long as the money purchased by the policy is available, usually three or four years. Once they end, people need to tap their other assets if they still need care.

The policies kick in when someone needs help with two or more daily activities, like bathing or dressing, Hughes said, after a waiting period. They can be used for short-term events in which a doctor expects the person's care to last 90 days or more, or they can be used for when someone enters a permanent facility.

It's also important to look at how the benefits are structured, whether the buyer gets a daily maximum benefit or a monthly benefit, Manning said. Daily benefits cap how much the person can withdraw on a daily basis, while monthly benefits let the person tap funds as needed during the month to the monthly limit.

"If the daily benefit is only $300 a day, that's different than a $9,000 monthly benefit," even though the money is the same, she said.

Debbie Carlson is a freelance writer.

Past-due premiums, missing tax forms may haunt health insurance customers »

Do I have Alzheimer's or don't I? »

60 is the new 40: Cosmetic procedures for boomers and beyond are on the rise »

___

(c)2017 the Chicago Tribune

Visit the Chicago Tribune at www.chicagotribune.com

Distributed by Tribune Content Agency, LLC.

Older

One Drop Announces Regulatory Approval And Launch In Canada

Newer

The Latest: Republicans and Democrats spar over tax bill

Advisor News

  • For some, nothing to fear from taking RMDs, professor says
  • Half of investors plan to work after retirement
  • Cetera to acquire Securian’s retail wealth business
  • Study: Education level should drive decisions on Social Security, annuities
  • Former California energy company exec given 5 years in prison for $15M investment fraud
More Advisor News

Annuity News

  • Investors scrambling to lock in rates propel annuity sales to record highs
  • North American and Annexus launch new fixed index annuity
  • Producers stew as insurers slow to process life and annuity applications
  • Substitute teacher wins massive lottery drawing in North Carolina. ‘Too good to be true’
  • Brad Rhodes: An annuity product many have never heard of
More Annuity News

Health/Employee Benefits News

  • Nearly half of all gig workers have no access to health insurance
  • California offers health insurance for $10 a month. The deadline is days away
  • Amazon announces service to deliver medications to your door. Here’s how it works
  • COVID-19Another COVID ‘new normal’: more Californians dying at home
  • Seven sentenced in conspiracy to defraud federal health insurance programs
More Health/Employee Benefits News

Life Insurance News

  • Cetera to acquire Securian’s retail wealth business
  • What does Curtis 'Cousin Eddie' Smith know in Murdaugh case?
  • Alex Murdaugh's murder trial starts with cellphones, bullets
  • Prosecutors, defense argue guns, bad acts in Murdaugh trial
  • Lincoln Financial Group offers new, fully automated life product, WealthAccelerate
Sponsor
More Life Insurance News
The time is 05:47:22am test

- Presented By -

Top Read Stories

  • A Louisiana employer's health perks helped their workers lose weight. Here’s how.
  • US debt ceiling limit reached; Social Security, Medicare targeted
  • Former CEO of Texas beverage company sentenced to 10 years in prison for fraud
  • Will ChatGPT, artificial intelligence replace financial professionals any time soon?
  • LETTER: FEMA flood insurance is all but worthless
More Top Read Stories >

FEATURED OFFERS

Grow life insurance sales in 2023 with middle-market clients

Tap a new source for sales and referrals with Allianz Life Insurance Company of North America.

Don't Miss ICMG 2023

When the success of your business depends on making the right connections, ICMG is the place to be.

How to Write For InsuranceNewsNet

Find out how you can submit content for publishing on our website.
View Guidelines

Topics

  • Life Insurance News
  • Annuity News
  • Health/Employee Benefits
  • Property and Casualty
  • Advisor News
  • Washington Wire
  • Regulation News
  • Sponsored Articles
  • Monthly Focus

Top Sections

  • Life Insurance News
  • Annuity News
  • Health/Employee Benefits News
  • Property and Casualty News
  • AdvisorNews
  • Washington Wire
  • Insurance Webinars

Our Company

  • About
  • Editorial Staff
  • Magazine
  • Write for INN
  • Advertise
  • Contact

Sign up for our FREE e-Newsletter!

Get breaking news, exclusive stories, and money- making insights straight into your inbox.

select Newsletter Options
Facebook Linkedin Twitter
© 2023 InsuranceNewsNet.com, Inc. All rights reserved.
  • Terms & Conditions
  • Privacy Policy
  • AdvisorNews

Sign in with your Insider Pro Account

Not registered? Become an Insider Pro.