People who plan to live a long and happy life – a globe-spanning majority, we wager – must consider that at some point, they’re likely to need long-term care.
This can be administered at home or a variety of specialized facilities, but the cost is always high. Long before we’re old enough to need LT care, parents and family members may require our support in obtaining it. In such cases, targeted insurance policies can help protect your savings.
Long-term care policies come in many flavors. Some pay daily benefits of $50 to $500, depending on your comfort level with policy premiums. LTC insurance is available that pays a monthly benefit: this has the advantage of funding an unlimited number of days unaffected by the actual cost of treatment.
Inflation protection can be built into the policy. The rate is usually set at 3% or 5%, with annual compounding as an extra-cost option. As usual, the more you want, the more you should expect to pay in premiums, but it makes sense to consider inflation adjustment – the tendency of prices to rise can be taken as a certainty.
Indeed, our featured author warns against penny-pinching: the cost of LT care is elevated and set to rise. Last year, a room in a semi-private nursing home would have set you back $245/day – that’s nearly $45,000 for a six-month stay. For a private room – hardly a luxury – add 10% to those prices.
Benefit periods are an important consideration. The average patient stays in a nursing home for 2.5 years, but subsequent homecare must be factored into the treatment period. It’s common to purchase LTC insurance with the benefits covering two to five years, rising in one-year steps, but lifetime policies are also available.
For more information, please read:
How to protect your savings if you or a family member requires long-term care | Market Watch