Everyone reaches a point in life where they need someone else’s help, whether they have fallen sick, been in an accident, or simply reached an advanced age. While we always hope that we will be able to recover and regain our independence, sometimes we need assistance longer than expected. Since the costs of long-term care can quickly add up, it is important to have a contingency plan in place.
Long-term care insurance can provide a cost-friendly alternative to out-of-pocket expenses, enabling your loved ones to care for you in a time of need without sacrificing their own finances.
What Long-Term Care Coverage Does
Every long-term care insurance plan has its own rules, benefits, and restrictions. In general, though, long-term care insurance disburses daily, weekly, or monthly benefits to either the policyholder or a designated and approved caregiver.
Long-term care policies may take effect and begin disbursing benefits whenever the policyholder—or other named beneficiary—is diagnosed with a chronic medical condition, disability, or disorder that makes it difficult or impossible to live without external assistance or support.
Policies can help reimburse the costs associated with care, whether care takes place in:
Your own home
A nursing home
An adult daycare
A wealth planning specialist can help you determine your ideal coverage limits, depending on your current financial situation and family health history.
Who Needs Long-Term Care Coverage
Most Americans eventually need long-term care. For people who do not have limitless financial resources, an insurance policy can be the best way to cover the expenses associated with chronic and debilitating conditions like Alzheimer’s and dementia.
However, purchasing a long-term care policy can be a difficult decision for many people. Insurance, after all, costs money—and the cost of long-term care coverage tends to increase with age.
Consider this: the AARP has found that over 70% of all long-term care claims are made by Americans over the age of 81. You might think, then, that you should wait until you are in your 70s to purchase a policy. However, this is not always a good idea. While you can’t be faulted for wanting to save money, the truth is that the cost of a new premium rises with your every birthday. Consequently, it is important to identify the “sweet spot” between purchasing a policy too early and spending too much money on coverage before you need it and purchasing a policy too late and getting hit with a high premium.
Your “sweet spot” may be different from others people’s. For most healthy people, the sweet spot for purchasing long-term care insurance is between the ages of 55 and 65.
But no matter your circumstances, experts recommend that you have a policy locked down before your 65th birthday.
The Importance of a Policy
Long-term care insurance is something that most Americans need but which too few purchase. Although the costs of a long-term care policy can dissuade many people from making the investment, it is important to consider how much self-funded care can cost:
Long Term Care Expense
If you plan to be taken care of by family, expect your loved ones to pay in excess of $140,000 for your long-term care.
Assisted Living Expense
If you plan to relocate to an assisted living facility, expect your loved ones to pay the Arkansas average of $40,000 per year.
Nursing Home Expense
If you plan to relocate to a nursing home, expect your loved ones to pay the Arkansas average of $53,000 per year.
A long-term care policy makes sense for almost everyone who:
- Can afford their premium
- Does not have hundreds of thousands of dollars in excess cash or assets
- Wishes to ensure their loved ones’ inheritances will not be spent on nursing homes and personal care attendants
Contact Us Today
Long-term care insurance makes a lot of sense for a lot of people. However, it is not the only solution for people trying to insulate their future—and protect their loved ones—from the costs of caregiving.
Quraishi Law & Wealth can help you create a custom-fit plan that takes into account not only your finances but your family’s medical history, retirement goals, and other long-term aspirations. Send us a message online to schedule your initial consultation.