On this show this week, I had a couple of callers who wanted to know about insurance as they age. I recommended long-term care insurance as a good use of their insurance dollars.

Long-term care insurance covers your stay in a nursing home (most people will do some time in a nursing home-type facility or need home health care). The policies are the cheapest if you buy them when you’re relatively healthy in your mid-50s, but you can buy an affordable policy all the way into your late 60s (if you’re healthy).

The idea is that these policies will pay the cost of a nursing home, which can run upwards of $80,000 per year. If you and your spouse each need to be in a nursing home, it’s easy to see how quickly $160,000 per year will deplete your assets.

You’ll want to find a policy that is offered by a top-quality company (check out the company’s ratings at either www.moodys.com

And that includes cost of living adjustments (COLA). Be sure to shop around before you sign on and ask your financial advisor or attorney to walk you through the policies.

Where can you get great information on long-term care policies?

This page will tell you how to avoid getting ripped off when you purchase long-term care insurance.

The Federal government offers a long-term insurance option to its employees.
You might also try http://www.ltcfeds.com/start/aboutltci.html

There is an American Association for Long-Term Care Insurance. This is a non-profit trade association for insurance companies and agents who sell LTC. They have some decent information on their website for consumers.
www.aaltci.org/consumers and they also have some interesting tax updates on the site as well. In 2007, some or all of the cost of purchasing an LTC policy may be tax deductible:

http://www.aaltci.org/subpages/media_room/story_pages/media110906.html (this page has the tax-deductible limits).

As you’d expect, the Federal Trade Commission has a whole host of information, resources and links on an LTC Insurance page.

Pueblo, Colorado. The Federal Government also publishes useful information on long-term care insurance from this link.

What should you look for in a long-term care insurance policy? This is from the booklet published by the Federal Government (above link):

The “National Association of Insurance Commissioners” (www.naic.org/cis/) has developed standards that protect consumers. You should look for a policy that includes:

  • At least one year of nursing home or home health care coverage, including intermediate and custodial care. Nursing home or home health care benefits should not be limited primarily to skilled care.

  • Coverage for Alzheimer’s disease, should the policyholder develops it after purchasing the policy.

*An inflation protection option. The policy should offer a choice among: automatically increasing the initial benefit level on an annual basis, a guaranteed right to increase benefit levels periodically without providing evidence of insurability.

*An “outline of coverage” that systematically describes the policy’s benefits, limitations, and exclusions, and also allows you to compare it with others. A long-term care insurance shopper’s guide that helps you decide whether long-term care insurance is appropriate for you. Your company or agent should provide both of these.

  • A guarantee that the policy cannot be canceled, nonrenewed, or otherwise terminated because you get older or suffer deterioration in physical or mental health.

*The right to return the policy within 30 days after you have purchased the policy and to receive a premium refund.

  • No requirement that policyholders: first be hospitalized in order to receive nursing home benefits or home health care benefits, first receive skilled nursing home care before receiving intermediate or custodial nursing home care, first receive nursing home care before receiving benefits for home health care.

Please let me know if this information is useful. If you have additional links that would help Think Glink site visitors, please post them in a comment.

Published: Jan 15, 2007