Long Term Care Planning Guide

Last updated on December 8th, 2020 at 10:19 am

Are you prepared with a plan to address a need for long term care that can span several months or even years?

Statistics suggest that 70% of us will need long-term care services one way or the other after we hit the age of 65 years.

LTC care costs are skyrocketing at an unprecedented rate in this country. Without a solid plan, long term care costs can eat into your savings, deplete your assets, and even negatively impact your loved ones. This article serves as a simple but accurate guide that can help you plan for long term care.

Most people receive long-term care at home

Based on statistics and surveys from multiple sources, it appears that most Americans prefer receiving long term care at home. Of course, your home provides comfort and solace during difficult times, which is one reason behind this trend. A good LTC insurance plan will pay for your care, whether you receive it at home, in a nursing home, or at an assisted living facility.

LTC planning sweet spot

The LTC planning sweet spot is when you can obtain cheaper insurance, and have maximum options available to choose from. Between your 50s and your 60s is the perfect spot to buy long term care protection. Keep in mind that LTC coverage is cheaper the younger and healthier you are.

Little coverage is better than none

Purchasing a ‘smaller’ LTC insurance that can service part of your LTC care costs can provide the protection you need for less than you think. Three-quarters of the people who are buying this form of insurance today choose a 3-5 year benefit period. When specifying benefit protection, you have the following options.

Owning LTC insurance provides some financial leverage in that you are able to access benefits. Adding a nominal inflation growth factor provides maximum potential benefits at older ages when you might need long term care. LTC insurance policies currently available in the market offer numerous future growth options for benefits:

  • Fixed amount of benefit protection – this is the cheapest approach where your health is evaluated and a fixed amount of benefit dollars decided upon. In the case you ever need long term care, this fixed amount is what you’ll get, without computing for inflation.
  • Benefit increase options – for paying a little bit more in premiums, you can get coverage where your benefits increase in the future.
  • Annual benefit growth – this is your best option and it’s what most people buying insurance today prefer. Your policy grows at an annual compounded rate (let’s say at 3%), which means your benefit amount will have increased significantly if and by the time you start receiving benefits.

Some quick LTC insurance claims stats

  • In 2013, insurance firms paid $20.5 million in long term care claim benefits per day.
  • A total of 273,000 policyholders filed claims in that year.
  • Throughout the year 2013, insurers paid out a total of $7.5 billion in long term care claims.
  • The largest claim paid out to a female policyholder was worth $1.8 million.
  • The largest claim paid out to a male policyholder was worth $1.3 million.

Over half of all new LTC insurance claims begin at home. Indeed, being able to remain at home when long term care is needed happens to be the number one reason why most people purchase this form of insurance.

Think you might never need long term care? Think again…

Yes, you may be right. But what if you were wrong? What would happen to your family then? The consequences of needing long term care can be devastating:

  • Emotionally – because your family members and loved ones have to navigate the caregiving system trying to find the best option for you.
  • Physically – especially if your family members have to play caregivers for you.
  • Financially – because care costs can run into hundreds of thousands of dollars. This might eat into the legacy you hoped to leave your children, or worse still deplete your entire savings.

Here’s why you should plan right now

The fact that Americans are living longer means that there’s an elevated risk that many of us will need some form of long term care, especially after we’re past the age of 65 years. That said, what is your plan should you or your loved one suffer from a health impairment and end up needing care for months or even years? To qualify for long-term care protection, your health must qualify.

  • Your health could change at any time, and now is the best time to learn more and even subscribe to LTC insurance.
  • Even if you don’t think you or your loved one will ever need care, it’s good to weigh your options right now, just in case.
  • Today is the best time for you to speak to a seasoned long term care insurance professional.

Create your LTC strategy

To craft a powerful and solid long term care strategy, invest some time to learn more about:

  • The level of independence you want to maintain in your future.
  • How and where you’d like to receive care if you ever needed it.
  • How you’d like your family to contribute to your care.
  • How you’d like to fund your care costs, while at the same time protecting your income, savings, and assets.

For many Americans, buying long term care coverage makes the most sense. At the expense of making a not-so-big investment, they can get the peace of mind that if they ever need care, it’s all catered for. This can also preserve peace and cohesion in your family because it allows your loved ones to be your family, not your caregivers.

Steps to take

  • Find out how much long term care coverage costs.
  • Contact a seasoned professional and ask what discounts you might qualify for.
  • Determine if your health is in good-enough status for you to qualify for coverage.
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