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Archive for the ‘Long-term Care Insurance’ Category

If you are out shopping for long term care (commonly abbreviated as LTCI or LTC), I’m going to encourage you to take a look at a way of providing long term care benefits that is probably new to you. On the other hand, if you are in the crowd that thinks they will never need long term care, I would also suggest you evaluate this line of thinking.

Dick and Jane are both age 65, recently retired and models of good health. They have ignored the long term care subject until recently. They just put Jane’s mother, who is 88, into a nursing home. Talk about sticker shock! She is in a nice place, but Dick and Jane are not 100% certain that her assets will allow her to stay there for the rest of her life.

Consequently, they have been out looking at long term care for themselves. They figure they can afford to insure a portion of what it might cost them if they ever need some form of LTCI, so they are looking at a benefit of $3,000 a month. The premium is around $4,200 a year.

Here’s a new concept that Dick and Jane must become accustomed to now that they are retired. They both had good jobs during their working years. If they ever wanted to buy anything, it was just a question of looking at their income to see if they could swing the purchase. Pretty straightforward.

Now that they are retired, most of their expenditures are going to come from investment returns on the assets they have accumulated, not income from working. So they need to understand the difference between premium cost and opportunity cost. Here’s what I mean…

If they elect to buy this $4,200 a year long term care policy, the money has to come from somewhere. Chances are it’s coming from the interest earned on perhaps a CD or an annuity. But there is an opportunity cost associated with paying the premiums from earnings on any asset.

Let’s say they are going to pay this $4,200 from the interest on a CD they own which is earning 5.4% interest. Since interest is taxable, and assuming they are in a 15% tax bracket, they would have to have $91,300 in that CD to produce $4,200 after tax to pay the premium.

They can’t spend the $91,300. It can’t grow. Basically, they have “committed” $91,300 of their assets to pay the premium on their LTC policy. That’s the one “job” of this $91,300. The premium may only be $4,200 a year, but the opportunity cost is $91,300.

Let’s take a look at another of their alternatives. It’s called asset based long term care. How it works will unfold as I provide the example and contrast below.

One approach to asset based long term care involves re-positioning $91,300 of Dick and Jane’s CD to a combination long term care/life insurance policy plan with an insurance company. Here’s what moving this money does for them…

The money on deposit with the insurance company grows at interest, but it is tax-deferred interest so the insurance company will not send them 1099s every year for an amount they have to pay tax on like the bank is required to do. In 10 years, assuming current rates, the $91,300 will grow to $127,000; in 20 years $161,000. The CD, remember, does not grow, as its job is to spin off interest to pay the annual $4,200 premium on the traditional LTCI plan.

If either Dick or Jane needs any form of long term care, the insurance company plan will pay them $3,900 a month for 50 months–$900 a month more than the traditional plan.

But here’s the real kicker.

If Dick and Jane never need long term care, then the camp that doesn’t buy it would have been right. If Dick and Jane bought the traditional long term care plan, in 10 years they would have paid out $42,000 in premiums and about $7,400 in taxes on their CD interest in order to net out the required premium. That’s a total of $49,700. The $91,300 portion of their CD would still be $91,300.

However, if Dick and Jane never need long term care, chose the asset based long term care plan and both die, for example in 10 years, the outcome is different. They have paid no annual premiums and the life insurance company will pay about $198,000 tax free to their kids.

Which sounds like a better plan?

Most people fear of confronting retirement years when financial issues are at stake, afraid of the circumstances that could make them hapless and penniless. The most feared financial problem is the excruciating cost of long term care for people with serious health problems. Elders feel paralyzed not by their physical deficiencies but due to the sky-rocketing prices of long term care.

The increasing life expectancy should be the basis in considering LTC. The longer we live, the more instance for us to pay someone to help us perform our daily chores and personal activities. American’s life expectancy is said to have increased dramatically. Since 1940, the chance of living another 20 years have doubled and expected to have increased by 2030.

Longevity means the inception of medical problems that might inflict such as cancer, Alzheimer, and other age related diseases any time in the future. Elders over the age 85 more likely suffer the gradual loss of ability to take care of oneself due to the feebleness of the physique and mental deterioration. Patients with chronic ailments such as dementia and Alzheimer live as if their almost dead.

Before, no one else but the families are expected to take care of a sick or aged loved one. The children of the old parents normally take the responsibility of caring for their mothers and fathers, and the services of caregivers were rare. Today, the caregiving responsibilities in the family are no longer practiced as divorce, smaller family size, and separation triggers the lost of closeness and love in the family. Divorce has catastrophic effects in the family. Women’s participation in the workforce also aggravates the problem, since women no longer perform their obligation in the family like care giving because they are more focused on their jobs rather than their families. With those kinds socio-cultural factors, the old or sick family member suffers most. Thus, the services from what we consider as “strangers” are needed to fill in our responsibility for old parents or family member.

The costs of nursing homes are annoyingly expensive. Nursing homes’ yearly average rates range from $100,000 or more, and the cost increases together with the inflation. Home services which include physical therapy, food preparation, and more, are somewhat costly as well, amounting from $80 – $250 per day. Only few people can keep up the costs of long term care. Although some are financially capable, they are hesitant to shell out excessively for long term care, primarily to prevent financial shortage or loss.

A congressional subcommittee on aging performed a study and unraveled that 70% to 80% of all nursing-home residents have utilized their personal and family savings to avail the services in the facility. After exhausting all savings and assets, nursing-home residents normally move to less costly and undesirable facility. Most Americans are said to have done nothing to prepare for long term care for the belief that Medicare will save them. Too late will they know that Medicare only qualify low income groups with total assets of $2000. Otherwise, Medicare typically pay for 100-day admissions in a hospital or nursing home. Medigap plans are also unreliable when it comes to long term care. Unfortunately, Medicare or Medi-cal excludes in the long term care coverage on elders tormented with old age, but give priority to elders suffering from acute illnesses. And, worst, most of the top-rated nursing homes in found in any states refuse applicants under Medicare or Medi-cal program. This means Medicare recipients receive less or mediocre quality of care compared to those who can afford private long term care.

This crippling financial problem on long term care has persuaded many insurance companies to improve the policies for LTC. Nowadays, there are so many companies offering more affordable and comprehensive LTCi compared to the earlier policies. Now, most people prefer buying their own long term care insurance policy rather than risk their welfare on lousy Medicare program. Long term care insurance depends largely on the person’s health and age. Most long term care policies are limited to those in good health, so only few companies are selling insurance to over 80. It advisable to be insured by age 50 or younger to save more on the premiums and lock in benefits.

The type of long term care insurance policy depends mainly on personal needs. Some people need immediate and direct medical attention; others only need assistance in their own home. Should you sign up for a long term care insurance policy, assess your needs first and shop around for a good insurance company. Don’t overlook the policy and make sure the policy will provide coverage as long as you want to. Also, make sure the policy is guaranteed renewable.

Long-Term Care insurance is a necessary part of Long-Term Care Awareness Month created by Congress when the resolution was passed. Why was this passed by Congress? The government recognizes that millions of individuals tap into hard-earned savings to pay for their long-term care unless they have a plan in advance for handling these large expenses. Advance planning for this expense will help protect caregivers’ health, financial security and quality of life.

Many people think that the government (Medicare) will take care of their long-term care needs.

You need to take a long, hard look at many insurance plans before deciding which long term care (LTC) insurance is best for you. Long term care insurance comparison is something that everyone needs to do before paying their first premium. Not only will you be better prepared to make the right selection regarding your premiums, you will find out the differences between plans and programs. You need to do this for your own financial security, now and in the future.

You need to be protected for any unforeseen medical catastrophe that might someday occur. Without the right insurance, you run the risk of finding yourself unable to pay someone to take care of even your most basic needs. Older people, especially, are very likely to have a stroke or mental disability that leaves them helpless. Even if they have funds available, it depletes quickly because of the high cost of in-home or nursing home assistance. If other services are needed, such as visiting nurses, home-delivered meals and housekeeping, then they too will deplete much needed funds.

LTC insurance is a way to protect yourself in the event of a medical emergency that leaves you unable to go about your daily life. There are over 100 companies that are now selling LTC insurance to qualified individuals. Each of these companies has its own requirements and discounts. You can purchase it either through a group or individual plan at a wide range of prices. Many employers are now offering it as an option to their employees. If you are retired or unemployed, you can purchase an individual LTC insurance policy. You will need to shop around to find a plan that fits your budget, your current age and your health status. Coverage and costs vary considerably from plan to plan, depending on many factors.

Long term care insurance comparison is something you will definitely have to do at the earliest possible date. Don’t wait until you are older and less healthy to do so because you may not be able to afford it. If it is at all possible to buy it now, you will reap great rewards in the future. And, it will give you peace of mind today that you will be financially able to help with your custodial costs if, and when, they are needed.

Long term care insurance or LTC is an insurance product which helps in providing long term care to the insurance holder beyond the time period determined initially. This is not a product which covers the sick in the literal sense; it covers the people who are unable to do their daily chores themselves like, bathing, continence, toilet and eating.

This is an insurance product which is generally sold in United Kingdom and the USA.

This product does not cover the illnesses covered by Mediclaim. Though age is not a determining factor for this insurance but generally this product is popular amongst those who have crossed 65 years of age.

Long term insurance care includes hospice care, respite care, nursing home and home care. It is especially useful for people suffering from Parkinson’s and Alzheimer disease. When such an insurance cover is taken for home care it covers the cost of companion, housekeeper or the caregiver, 24×7. Apart from that, this kind of insurance also does away with the support that a person may require in his old age from his children or other family member. Now long term care insurance can take care of the person without getting his or her savings depleted, or be at the mercy of his children. That apart the premium paid for such an insurance cover is also eligible for tax deductions. These kinds of policies provide for cover for daily benefits. Generally most of the policies range on the payout of $50 $300 per day.

It is better that one buys a long term care insurance cover at an ideal age. The later one decides to purchase, the expensive will it get for him or her. The ideal age to buy one is when one is middle aged. The premium rate for such an insurance policy is worked keeping in mind the age of the insured, the daily or the monthly benefit that he seeks, the protection against inflation, the elimination period of the policy and the general health of the insured.

Most companies also offer couples or multi life policies just to offer attractive discounts to those seeking such policies. Protection against inflation is one of the most important governing factors for a person to seek such a cover because the cost of maintenance is expected to raise manifold in view of the inflation. Even if decides to keep aside his savings, the ever escalating cost factor may make the sane insufficient in future.

These kinds of policies have been getting popular in the US by the day. Since the mortality rates have gone down and the life expectancy rates of the Americans have gone pretty high, more and more people are resorting to these policies.

Though it is obvious that the long term care insurance does away with the dependence one has on his children for his or her upkeep in the old age, it can also come in handy for people who are in the same sex community. Since the couple in the same sex communities cannot carry forward their families, this kind of policy comes as a boon for them. It gives them the assurance of being looked after in their old age without having to worry about the escalating bills on their maintenance.

Most of the policies are comprehensive policies which include the home care coverage, assisted living coverage and nursing home care coverage. Nitty gritties like the daily payouts that one would want, the total time limit you until which one would want the coverage and waiting period are worked on case to case basis. The premiums stay same every year unless the company concerned decides to hike it all across the board.

If one compares the advantages accruing from a long term care insurance cover plan, it is difficult that he or she may refrain from getting covered with one of them.

When it comes to LTC insurance providers, the John Hancock Life Insurance Company has long been considered to be a solid company. They were one of the first companies to begin selling this ever-more-important insurance product and are well known for their claims-paying capability, too.

Very recently as of the time of this writing, John Hancock qualified to become listed in the Insurance Marketplace Standards Association (IMSA), which is the independent standards-setting and compliance solutions organization for the life insurance, annuity, and long-term care insurance marketplace. John Hancock has to undergo review every three years to re-qualify for membership listing. Companies achieve membership based on their having ethical standards (such as being truthful in their marketing and advertising) as well as delivering product and service quality.

However, John Hancock did recently need to raise its premiums on over 275,000 of its LTC policy holders.

When the long-term care insurance market opened up in the early 1990s, John Hancock sold many policies based on the idea that the policy holders would only keep them for a limited time and then drop them–such as if they had bought a term life insurance product to insure them against the unexpected for a temporary period of time. Some financial professionals recommend that anyone who has a net worth of at least $2 million does not need to maintain a long-term care insurance policy, the premiums on which are high compared to other insurance products (except for health insurance, which many will tell you is not “real” insurance anyway but is actually subsidized medicine) because of the fact that people under 40 cannot qualify for these products (that is, they are by their nature relatively high-risk insurance policies). So, many John Hancock LTC policies were sold with the idea that as their holders continued to work and gather assets, if nothing unexpected or unforeseen happened they would one day be worth at least $2 million and no longer need their policies–meaning, John Hancock would never have to pay any claims on them.

Instead, the vast majority of these clients have chosen to continue with their policies because they don’t desire to have to pay out a great deal of money from their own personal fortunes just because they would have the capability of doing so in the even that they needed long-term care. Furthermore, these policy holders decided that they weren’t satisfied with paying in all of those premium dollars and then getting nothing in return in the long run. (The analogy with term life insurance isn’t strong here because term life is far, far less expensive than LTC.)

On average, these affected policy holders now have to pay an additional $262 per year–or $21 per month–to maintain their LTC policies.

While John Hancock was certainly not trying to deceive anyone, this recent development demonstrates that long-term care insurance is much more valuable to people than those without it and many financial professionals believe it is. A provider like John Hancock is a great place to turn to when you are considering buying LTC.