According to mysuburbanlife.com's recent article "Understanding Long Term Care Insurance," the U.S. Department of Health and Human Services defines long-term care (LTC) as a range of services and supports that an individual may require for activities of daily living like bathing, dressing, using the toilet, and eating.
Long-term care also covers assistance required because of dementia or other cognitive impairments. LTC also can provide assistance with daily household tasks such as housework, grocery shopping, preparing and cleaning up after meals, and caring for pets.
In anticipation of needing to pay for these services, people typically purchase long-term care (LTC) insurance policies.
There are several things to consider and several types of LTC insurance to review before purchasing a policy. One of the most important items to note is that LTC policy premiums may increase down the road. This is based on the insurance company's overall claim experience. Your future premiums will need to be paid with your retirement income.
The cost of your LTC policy is based on several factors:
- How old you are when you purchase the policy
- The maximum amount that a policy will pay per day (or the annual benefit)
- The maximum number years that a policy will pay or its maximum lifetime benefit
You should also purchase lifetime benefits over the life of the policy and inflation protection that will increase daily, monthly and annually. Many insurance companies will offer LTC policies to individuals between 40 and 80 years of age. They typically give discounts if both spouses apply together.
LTC is a major threat to a person's retirement income, so if your assets average more than $80,000 and your annual income averages at least $35,000, you should consider purchasing some LTC insurance.
Reference: mysuburbanLife.com (April 7, 2016) "Understanding Long Term Care Insurance"