What You Need To Know About Long-term Care Insurance

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What youneed toknowaboutlong-term careinsurance

Who will care for you whenyou can’t care for yourself?4Chances are the day will come when you won’t be able to manage on your own. The good news is, people are livinglonger. However, that increases the chance that you willlive to the age where you will need long-term care.Long-term care includes all the assistance you would need withdaily living tasks if a chronic illness or disability leaves you unableto care for yourself for an extended period of time. It could becare in your own home or in a specialized facility.Care options that may beavailable to youMany people think their private healthinsurance or Medicare would pay,but that’s typically not true. Healthinsurance really only pays for doctorand hospital bills. Medicare will coverskilled care for periods up to 100days, but only if certain requirementsare met. If you need care over anextended period of time, you’d haveto spend down your assets beforeMedicaid would kick in, and then,you’d have less choice about the careyou receive.Others assume their loved ones wouldprovide the care they may somedayneed, but that’s an imperfect plan.Many don’t recognize the significantnegative impact caregiving could haveon the caregiver, who often suffersemotionally and financially as a resultof their caregiving responsibilities.1If your plan is to turn to your family,is that what’s really best for you andthem?Reasons to ConsiderLong-Term CareInsurance1Allows you to stay at homeor in a setting of your choice2Helps you maintain yourindependence and dignityhelp protect your3 Canretirement assets or incomeelps relieve financial and4 Hcaregivingpressure on yourfamilyneed and spending down your life’ssavings.In short, long-term care insuranceputs you in control. But are you theright age to consider it? Can youafford it? And if so, what kind ofbenefit features should your policyinclude? This guide will answer thesequestions and help determine if longterm care insurance is right for you.Long-term care insuranceputs you in controlLong-term care insurance helps makesure that you’ll have access to highquality care should you ever need it.Using insurance to pay for care alsomeans that you won’t need to choosebetween getting the assistance you1Unum, Adult Caregiving, 2018The High Cost of Home Health Care and Nursing Home CareLong-term care services may quicklydeplete even the best-planned nestegg. The national median cost for ahome health aide for an eight-hour dayis approximately 49,000 annually. Anassisted living facility in the U.S. has amedian cost of roughly 45,000.The map at right shows sample mediancosts for home health care and privateroom nursing home care. Costs can varyconsiderably depending on where you live.Minnesota:HOME HEALTHCAREar 61,776 per yeCalifornia:HOME HEALTH CARE 57,200 per yearASSISTED LIVINGFACILITY 51,300 per yearINGASSISTED LIVFACILITYar 43,020 per yeFlorida:HOME HEALTH CAREarr ye 45,760 peVINGASSISTED LIFACILITYr year 51,300 peTo see the cost of care in your area, visit www.lifehappens.org/longtermcarecost.Source: Genworth 2017 Cost of Care Survey, conducted by CareScout

Preserving a Secure FutureHigh school sweethearts Allen and Lynda Striepe were true soul mates. Theymarried, became schoolteachers and were very active in their local church, withAllen serving as a lay minister and Lynda playing the organ.When they were in their mid-50s, they decided to buy long-term care insurance, abenefit offered through their employer. Though they hoped they’d never need to useit, they wanted to make sure to preserve their retirement savings should one of themrequire care.Their timing was fortunate. Several months after acquiring their policy, Allen startedto forget things. By the next year, Allen was diagnosed with Alzheimer’s disease andcouldn’t return to work. He soon needed a home health aide so Lynda could continueto teach, and it was paid for by the long-term care insurance policy. When his conditionworsened, the policy covered his stays in an assisted living facility and, later, a nursinghome.Pneumonia took Allen’s life less than two years after his diagnosis. While nothing canmake up for the loss of a spouse, having the policy helped preserve Lynda’s financialsecurity because she didn’t have to pay for Allen’s care with retirement assets. Lyndawas able to retire at age 60—as planned—and she’s living the way she always has.“Nothing fancy, but comfortable,” she said.Watch the complete story online at www.lifehappens.org/striepe.Lynda StriepeWhere care is providedProfessional care can be delivered in a variety of different settings, and manylong-term care insurance policies give you the option to receive care in thesetting of your choosing.Home health care: Services provided at homeAssisted living facility: Residential care setting that provides housing andsupport services for people wanting or needing assistance with daily livingtasksMemory loss units: Often located as a separate wing of an assisted livingfacility, these units provide 24-hour support, and locked premises to assurethat no one wanders off65% saymost people need long-termcare insurance.But here is the disconnect:only 57% say they personallyneed it, and only 15% saythey own it.Nursing home: Full-time care in a dedicated facilityAdult day care: Community-based, daytime supervision providing social,recreational or health assistance off-site during working hoursSource: 2018 Insurance Barometer Study, Life Happensand LIMRAWhen will a policy start to pay for careGenerally, long-term care insurance policies begin to pay benefits when one of two different criteria is met and you havemet the elimination period.You are unable to perform two of the six activities of dailyliving (ADLs) without assistance or supervision:Continence: Control of one’s bladder and bowel movementsDressing: Clothe oneselfToileting: Use a toilet and perform associated personal hygieneorYou have severe cognitiveimpairment, such as Alzheimer’sdisease and other forms ofdementia, which make it impossiblefor you to live independently in asafe manner.Eating: Feed oneselfBathing: Bathe oneselfTransference: Move oneself into or out of a bed or a chair3

Why We Bought Long-TermCare InsuranceUnderstanding key featuresand benefitsWhen considering a long-term care insurance policy, youshould be familiar with the following:Daily/monthly benefit: The maximum daily or monthlyamount your policy will provide toward the cost of longterm care.Benefit maximum: The maximum benefit amount availableunder a policy (e.g., 360,000).Elimination period: The waiting period before benefits arepaid (e.g., 90 days). Opting for a longer waiting period is aEva Ng andher husband, RobertEva Ng has seen the benefits of long-term care insurancefirsthand. Her father had a long illness, and a policy helpedprovide the care he needed. While Eva, 53, and her husbandRobert, 62, are healthy and active today, the couple wantedto make sure they’d be covered in the future. “We wereconcerned about being old and not being able to take careof each other, as we have no children,” she said.good way to lower your premium cost.Inflation rider: A provision that helps benefits keep pacewith the increasing cost of care. See box below.Shared benefits rider: A provision that allows a couple toshare benefits between their policies. For example, if theyeach have 250,000 of benefits but one partner exhaustshis or her entire benefit, that partner can begin drawing onbenefits from the other partner’s policy.Eva is a petite 4 feet, 10 inches, 90-pound woman, whileRobert is 6 feet, 2 inches, and 240 pounds. “It would be hardfor me to physically handle him in our later years,” she said.To protect their assets and ensure they’d have the carethey might need, the couple purchased long-term careinsurance several years ago. The policies give them a senseof financial security. “If one of us has to go to a nursinghome, the other will have the option to stay in the houseand keep a few assets,” she said. “We’ve known others whohave lost their homes when one of them had to go to afacility.”While the couple was initially concerned about the cost,they worked with their insurance professional to find apolicy with the benefits they wanted, and at a price thatsuited their budget. “Having a long-term care insurancepolicy will assure us a degree of dignity as we will eventuallyneed others to take care of us,” Eva said.Free-look period: A 30-day time frame after purchasinginsurance, during which you may cancel for a full refund ofyour premium.Guaranteed renewability: Your policy cannot be cancelled,and premiums cannot be increased unless all policies ofthat type within a particular state are increased together.Care coordination benefit: A service where a professionalmay arrange, monitor or coordinate the necessary services.Exclusions: Certain conditions are listed as exclusions formost policies including, but not limited as policies vary, toalcoholism, drug abuse, some mental illnesses and nervousdisorders. Self-inflicted injury is also usually excluded fromcoverage.Keeping up with increasing cost of care4 Consider the options available to grow yourbenefits to help keep up with increasingcost of care. Your selection can have asignificant impact on the premium you arecharged. The faster your benefits are set togrow, or the more guaranteed the growth is,the higher your premium will be.Examples of options Step-rate inflation optionReturn of premium option1% and 2% compound inflationOptions that grow for a period and then level offGuaranteed purchase option—you have a limited rightto purchase more coverage, with no new underwriting

How much coverage do you need?Tips to help save on premiumsThe kinds and amount of benefits you need will dependon your budget, your geographic region, and what kind ofcare you think you’d want. It also may depend on whetheryou have any loved ones who want to play some role inyour care.Buy young: Rates, in part, are based on your age. Theyounger you are, the lower your premiums generally willbe. Also, the older you get, the more likely you are to havehealth concerns that make you uninsurable, or would makecoverage more costly. Less than 5% of policies are issuedfor people age 70 or older.3Here are some important questions to ask yourself todetermine the amount of coverage that’s right for you.Preferred health discounts: Most insurers offer preferreddiscounts to those in exceptional health. The majority ofpolicies are issued with standard rates. If you qualify as apreferred customer, discounts of 10 percent or more maybe available. What is the average cost of care in my area or the areawhere I plan to retire? Do I want my policy to cover the entire cost of care, orcan I afford to supplement the expenses from myretirement income and assets?Couples/partner discounts: Many insurers offer discountswhen both spouses or domestic partners apply forcoverage together. Some may even offer discounts tomulti-generational families or siblings who reside together. Do long-term illnesses, suchas dementia, run in my family? Has anyone in my family everneeded long-term care?Starter policies: Other financial priorities may make acomprehensive policy seem out of your reach, but someinsurance plans can be designed to offer a smaller starterpolicy to give some protection now. You can sometimesadd additional coverage down the road, or buy asupplemental plan to compliment your initial policy. What assets do I want topreserve and pass along to myspouse, partner or heirs? How much of my care, if any,will be provided for by familymembers?2When should you buy?It’s true that most long-term careinsurance claims are made whenpeople reach their golden years, butthere’s a misconception that youshould wait until you’re approachingretirement to buy a policy. Waitingtoo long to purchase a policy can bevery costly. Because rates are basedon age and health, it’s best to startshopping for a policy when you’reyoung and healthy.A good time to purchase is whenyou’re in your 40s or 50s. You cancertainly buy a policy when you’re inyour 60s or even older, but expectto pay considerably more. Plus, ifyou wait too long and develop acondition that may require longterm care, you could becomeuninsurable.Rates are based onage and health. Theyounger you are, thelower your premiumsgenerally will be.2018 Milliman Long Term Care Insurance Survey, published by Broker WorldThe Cost of Waiting – Buy Early, Save More Jane, 50, knows long-term care insuranceis most affordable to buy when you’reyoung and healthy. The policy she wantsincludes a 3% compound inflation rider,meaning that if Jane and her husbandwait until they’re 55 or 60, they’ll have tobuy a policy with a larger benefit amountto get the same coverage. Her insuranceprofessional shows her how much moreshe’ll pay by postponing the decision (seebelow). Jane and her husband decideto buy now to lock in more affordablecoverage based on her age and goodhealth.JANE’S POLICY FEATURESPool of moneyMonthly maximumElimination periodInflation riderJane’s premium 162,000 4,50090 days3% compound ALPREMIUM*IF PREMIUMPAID TOAGE 85Today50 4,500 1,804 63,140 0In 5 Years55 5,217 2,355 70,658 7,518In 10 Years60 6,048 3,175 79,375 16,235In 15 Years65 7,010 4,567 91,340 28,200COST OFWAITING*Assumes level premiums over the period illustrated, which is not guaranteed. Assumes “standard” rates.Source: Benefit and premium figures provided by one of the leading long-term care insurance companies in the U.S., August 20185

3 coverageways to get1Through an insuranceprofessional. Working with aprofessional who specializes inlong-term care insurance providesyou with a lot of flexibility andpersonal guidance. An insuranceprofessional can help you shoparound for the best policy amongmultiple insurance companies, andcustomize a plan to include thecombination of features and benefitsthat works best for your needs andbudget. If you’re in good health, youmay qualify for preferred pricing.That’s because the policy will beindividually underwritten, meaningthe insurance company will base itsprice on your health history. Pros:Flexibility, personal guidance. Customsolution. Good health discount maybe available.Buying through work can save youthe time of researching many policiesbecause your employer will havedone that work for you. If you’re notin perfect health, buying a policythrough work may make a lot of sensesince you may be asked fewer healthrelated questions in order to qualify forcoverage. However, if you’re healthy,you’ll often pay the same price aseveryone else in your general agerange, which means you might notget rewarded for your good health,2Through your employer. Thisis a convenient option becauseyou often can pay yourpremiums through direct billing.as you might with an individualpolicy. Also keep in mind that withemployer-sponsored coverage,your choice of policy features maybe limited because some offer onlycertain options. Pros: Pre-selectedplans from which to choose. Directbilling. No gender based pricing.Easier to enroll and qualify.3Through associations ormembership groups. Policiesmay be offered throughalumni groups, trade groups andother organizations to whichyou belong. Premiums are oftendiscounted and are based primarilyon your age and health. The plansthey offer could look a lot likeindividual plans offered througha professional, or similar to plansoffered though employers. Eitherway, you will generally work witha specialist to help you understandyour options and enroll. Pros:Discounted pricing.Take Advantage of Government IncentivesTo encourage more Americansto take responsibility for their futurecare needs, the government hasdeveloped a variety of incentives toreward those who buy long-termcare insurance. Here are some youshould know about.Partnership programs: Long-term care insurancepartnership programs are designed to encourageconsumers to buy private long-term care insurance, whichwill help you avoid spending down most of your assets toqualify for Medicaid-sponsored long-term care. Over thelong haul, these partnerships between states and privateinsurance companies save money for both consumers andthe government. Programs vary by state, so talk to yourinsurance professional about how this could apply to you.6Federal tax incentives: If you buy a federally qualifiedpolicy (and most policies are), your insurance premiumsmay be deductible as part of your medical expenses onfederal tax returns and benefits are received tax-free.State tax incentives: A majority of states have a statetax incentive for residents who purchase long-term careinsurance.Incentives for business owners: There are also taxadvantages for businesses that buy long-term careinsurance. Premiums for tax-qualified policies paid foremployees, their dependents, spouses and retirees may betax deductible as a business expense.Make sure to consult with your tax advisor to fullyunderstand which tax benefits may apply to your particularsituation.

Hybrid Policies:Long-Term Care Insurance LinkedWith Life Insurance or an AnnuityFor people who are concernedabout their future long-termcare needs but not convincedthat traditional policies are thesolution for them, there’s anewer kind of insurance optionthat is growing in popularity.They’re alternatively calledhybrid, combo or linkedbenefit products, and theytypically incorporate longterm care benefits with a lifeinsurance policy or an annuity.Life insurance may be a veryhigh priority for your familyright now. But over time, yourneed for life insurance willlikely diminish and the needto pay for long-term care maybecome a higher priority. Thesepolicies allow you to serve bothneeds with one policy.In short, you’d buy a lifeinsurance policy or an annuity,but the policy would includelong-term care coverageas a secondary benefit. If aneed arises, you can accessthe policy’s long-term carebenefits to pay for long-termcare services. If you never needlong-term care, there is a deathbenefit for your heirs and/or anannuity from which you couldtake regular payments.These policies can bestructured as a lump sum oran annual stream of premiums.Speak to an a insuranceprofessional about thepossibilities offered by thesenewer policies.Is a Hybrid Policy Right for You?MOLLY’S SITUATION Healthy 55-year-old woman Married with 2 college aged sons Doesn’t want to be a burden on her familyshould the need for long-term care arise Has 75,000 in discretionary assets andmakes a single, lump-sum payment to buy ahybrid policy with the benefits outlined below 421,520 140,506 75,000RETURN OFPREMIUMororDEATH BENEFITTOTAL LONG-TERMCARE BENEFITSSource: Figures generated by averaging premium and benefits data provided inAugust 2018 by two leading insurance companies in the hybrid policy marketplaceA Burden RelievedOver the course of three decades, Joe and Theresa Mollicone’s insurance professional helped them with retirementplans as well as life, disability and health insurance, all of which they had to address on their own because each was selfemployed. Joe owned an excavation business, and Theresa ran a clothing boutique.As Joe approached his 65th birthday and his disability insurance was about toexpire, their insurance professional suggested long-term care insurance. TheMollicones were initially hesitant, but neither wanted to be a burden to the other orto their two adult children, so they purchased policies.Less than six months later, Joe suffered a massive stroke that left him paralyzedon the right side and unable to speak. Three months after the stroke, the long-termcare insurance policy started paying the maximum daily benefit of 150, whichincreases by 5 percent each year and has been just enough to cover Joe’s homecare needs. Four years later Joe reached his payout limit, but continues to receivebenefits because of his policy’s shared-care rider, which allows him to tap into thebenefits from Theresa’s policy. To date, the insurance company has paid out morethan 400,000 in benefits.“If we didn’t have this insurance, caring for Joe would have depleted all the savingswe had,” Theresa says. “Now I’m not afraid of running of out money.”Watch the complete story at www.lifehappens.org/mollicone.Theresa and Joe Mollicone7

Life Happens 2018. All rights reserved

puts you in control Long-term care insurance helps make sure that you'll have access to high-quality care should you ever need it. Using insurance to pay for care also means that you won't need to choose between getting the assistance you need and spending down your life's savings. In short, long-term care insurance puts you in control.

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