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Why Long-Term Care Insurance is Essential for Your Financial Security

Two people making plans for long term care.

Long-term care insurance—a topic often overlooked but vital in securing your financial future. Picture this: you’ve diligently saved throughout your life, planning for retirement, but unforeseen health issues arise, demanding specialized care and draining your savings. Enter long-term care insurance, a safeguard against the unpredictable, providing peace of mind while protecting your hard-earned assets.

What exactly is long-term care insurance?

Long-term care insurance steps in when you need prolonged assistance due to health conditions or age-related issues. It covers services not typically included in regular health insurance. Unlike regular health insurance, long-term care insurance fills the gaps, covering a spectrum of services essential for extended care that are not typically encompassed by standard healthcare plans. These services span a range of supportive care options, offering a safety net for individuals facing various health challenges. Many insurance policies typically offer reimbursement for care provided across multiple settings, including:  

  • Nursing home care

  • Assisted living facilities

  • Your home

  • Adult day care centers

As the years pass, the probability of requiring prolonged care grows significantly. This necessity isn’t solely tethered to age; unforeseen accidents or sudden illnesses have the potential to strike at any given moment. These unexpected events can result in a situation where we find ourselves requiring aid for fundamental daily activities such as bathing, dressing, or even necessitating ongoing medical supervision.

Why should you buy long-term care insurance?

Investing in long-term care insurance is a prudent decision for safeguarding your future and financial stability. This coverage offers a crucial safety net against the potential exorbitant costs of extended care services. As we age, the likelihood of needing specialized care increases, and unforeseen health issues can arise at any time, demanding substantial assistance with daily tasks or medical supervision.

Long-term care insurance steps in to cover expenses for services like nursing home care, assisted living, in-home assistance, and adult day care, services often not covered by standard health insurance. Without this coverage, these expenses can significantly deplete savings earmarked for retirement or leave a burden on family members.

By purchasing long-term care insurance early, when premiums are lower and health conditions are potentially more favorable, you secure comprehensive coverage and protect your assets. It empowers you to make choices about your care while ensuring financial stability for yourself and your loved ones. Ultimately, acquiring long-term care insurance is a proactive step toward maintaining control over your future care needs while safeguarding your hard-earned assets.  

How does long-term care insurance work?

Long-term care insurance functions as a safeguard against the financial implications of extended care needs due to age-related issues, illnesses, or accidents. This insurance policy steps in when individuals require assistance with daily tasks or medical supervision for an extended period. Typically, once an individual qualifies for benefits, the policy kicks in, providing coverage for a range of long-term care services. These services could encompass various settings, including nursing homes, assisted living facilities, in-home care, or adult day care centers.

Eligibility for benefits in long-term care insurance is typically triggered by the inability to perform a certain number of activities of daily living (ADLs) independently or when one requires substantial supervision due to cognitive impairment. The specific criteria for eligibility can vary between insurance policies and providers, but they commonly revolve around the following factors:

  • Activities of Daily Living (ADLs): These essential activities include bathing, dressing, eating, transferring (moving from bed to chair), toileting, and continence. Inability or impairment in performing a set number of these activities triggers eligibility for benefits.

  • Cognitive Impairment: Some policies consider cognitive impairment, such as dementia or Alzheimer’s disease, as a factor for eligibility. If an individual requires supervision due to cognitive decline that affects their safety and ability to function independently, it can qualify them for benefits.

  • Waiting Periods: Certain policies have waiting periods, also known as elimination periods, where benefits are not immediately accessible after purchasing the policy. This waiting period can vary, usually ranging from 30 to 90 days, during which the policyholder is responsible for their care expenses.

  • Certification of Need: Eligibility often requires certification by a healthcare professional or licensed practitioner, verifying the individual’s inability to perform ADLs or confirming their cognitive impairment.

Understanding these criteria and the specific terms outlined in the policy is crucial. It’s advisable to review and comprehend the eligibility conditions before purchasing long-term care insurance to ensure it aligns with individual needs and expectations.

How much does long-term care cost?  

Understanding the costs associated with long-term care insurance is crucial in making informed decisions about coverage. The price can vary significantly based on several key factors:

  • Age: Typically, younger individuals secure more affordable premiums. Waiting until older ages might result in higher costs.

  • Health Status: Pre-existing health conditions can impact premiums and the availability of certain coverage options.

  • Coverage Amount: The extent of coverage you select greatly affects the premium. More comprehensive coverage tends to be pricier.

  • Type of Plan: Different plans offer varying benefits and structures, influencing the overall cost.

  • Inflation Protection: Opting for inflation protection within the policy can increase costs but safeguards against rising care expenses.

  • Waiting Period: Choosing a longer waiting period before benefits kick in can lower premiums but might affect when coverage starts.

How to buy long-term care insurance  

Timing is crucial. Planning early ensures more coverage options and potentially lower premiums. Waiting until you need care might limit your choices or make insurance unaffordable. Long-term care insurance is obtainable either directly from an insurance company or via an insurance agent. Before purchasing, it is important to assess the following:

  • Your Needs: Consider the level of care preferred, whether it’s home-based services or facility care. Evaluate family health history and potential support from relatives.

  • Research and Compare Policies: Delve into various policies available in the market. Scrutinize coverage options, benefit amounts, and duration. Compare premiums, inflation protection, and policy flexibility among different insurers.

  • Understand Policy Inclusions and Exclusions: Pay attention to the specifics. Analyze what the policy covers and what it excludes. Ensure clarity on waiting periods, coverage triggers, and potential limitations.

  • Consult with Experts: Seek guidance from financial advisors or insurance professionals specializing in long-term care. Their insights can clarify doubts and aid in making informed choices tailored to your unique circumstances.

  • Start Early: Purchasing earlier offers more options and lower premiums. Waiting until health issues arise might limit choices or make coverage unaffordable.

  • Review and Update: Periodically review your policy to ensure it aligns with evolving needs and changing circumstances. Consider updating coverage as life circumstances evolve.

How to move forward with long-term care insurance

Long-term care insurance is not just an expense; it’s an investment in safeguarding your future. It empowers you to make choices about your care while protecting your hard-earned savings and ensuring financial stability for you and your loved ones.

CFS Group, Inc. partners with clients to help manage their financial goals by utilizing a holistic approach to saving and investing. We will create personalized plans to match each client’s vision of financial well-being while providing a high level of customer service and developing lifelong relationships. Contact us today to speak with a financial advisor!

This material contains only general descriptions and is not a solicitation to sell any insurance products or security, nor is it intended as any financial or tax advice. If you need more information or would like personal advice, you should consult an insurance professional. You may also visit your state insurance department for more information. 



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