Long-term Care Insurance: How much is too much?
This heading appears on a linked article originally published by the New York Times. For anyone considering LTC insurance, the article contains a number of good points including:
1. Instead of buying maximum protection, consider scaling back on some of the bells and whistles. Doing so can lead to big savings.
2. Consider a joint benefit pool that can be used by either spouse (more on this topic below).
3. One place not to skimp is inflation protection.
Much of the advice in the article closely parallels how I approached the design of LTC policies for my wife and me when we signed on with MetLife a little over a year ago.
While everyones situation and needs differ, heres what I went with:*
- $150 / day benefit (applies equally at home, assisted living facility or a nursing home).
- 5% automatic compound inflation rider (so the daily benefit grows on a compounded basis for the rest of our lives)
- 4 years of coverage for each spouse.
- Shared care rider (allows benefits to be pooled, so the 4 year policies actually become an 8 year pool that can be used by either spouse).
- 100-day elimination period (this is like a deductible -- to reduce cost, we choose a long elimination period).
- Indemnity rider (this means we are paid the full $150 per day, even if our cost for services falls short of this amount).
- Home care and community care (this means that we do not have to be in a formal institution to receive payment for services).
- Respite care (this feature pays for a formal care giver to fill in for an informal care giver -- usually a family member -- for up to 21 days a year without needing to satisfy the elimination period).
- I also choose to go with an accelerated 10-year payment plan. Click here to read "Just Paid My '05 Long-Term Care Invoice."
* The plan I selected is called MetLife's Value Plan. While it provides substantial protections, compromises were still made to reduce premium costs.
Read all of my long-term care posts...
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Recently a reader asked what age I thought was ideal for buying long-term care insurance. In this post I share my thoughts on the pros and cons of buying at a younger age vs. waiting until retirement. The majority of people hold off shopping for ... Read
Morningstar recently published an article titled "The Ins and Outs of Long-Term Care Insurance." The article addresses 11 questions you should answer prior to investing in LTC insurance coverage. Personally I believe that LTC insurance is an expensive, but worthwhile investment. Read Morningstar's article. Learn ... Read
Thanks go out to reader Steve who asked: How's the long-term care application process? Steves question came in response to my recent post titled "Just Paid My '05 Long-Term Care Invoice." The process was very similar to when I applied for individual medical insurance ... Read
Thanks go out to reader Steve who asked: Is there much research available on the net...I haven't seen much, at least regarding specifics such as how much it will cost, etc.? Steves question came in response to my recent post titled "Just Paid My '05 ... Read
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