Paying for Senior Housing with Long-term Care Insurance

It used to be true that long-term care insurance was rather limited, only covering certain types of care under a small number of circumstances. But times have changed, and the industry has become more customer-friendly. Given the fact that senior housing and care are so expensive, and that costs only continue to rise, long-term care insurance is worth serious consideration.

What is Long-term Care Insurance?
Long-term care insurance policies are designed to cover housing and care costs for those who can no longer live on their own, due to a disability, chronic illness, or old age. Policies differ as to what type of care they cover, but it's possible to get coverage for your choice of home care, and a variety of senior housing options like assisted living or nursing home care.

Who Can Buy Long-term Care Insurance?
You can typically purchase coverage starting at age 18. Companies vary on their upper age limit, after which they won't sell a policy, but most are in the low-eighties. Check with your employer; some offer long-term care insurance as part of their benefits package.

How Much Does Long-term Care Insurance Cost?
Age and Health: The younger and healthier you are when you buy your policy, the lower premiums you'll pay. Of course, the sooner you buy, the more years you'll likely pay before needing the coverage. Many policies have a pre-existing condition clause, which states that they won't pay for care for a pre-existing condition for a designated period of time (usually no more than 6 months) after you buy the policy.
Policy Features

• Benefit Amount-This is the amount of expenses a policy will cover per day or per month. Costs above and beyond this are the responsibility of the individual.
• Benefit Period-How many years the policy will cover your expenses.
• Inflation Protection-An optional addition to the policy that protects your benefit amount against inflation, since $150 won't go as far in ten years as it does on the day you buy your policy. It's recommended that you purchase at least 5% annual protection.
• Elimination Period-Think of this like a deductible. It's the period of time you have to pay for your own care or housing before the policy kicks in.

What Should I Watch Out For?
Be sure to carefully read the actual policy before purchasing. Don't buy a policy that increases your premiums as you age, and don't buy a policy that will take a significant chunk of your current assets or income. It may be wise to consult a financial advisor before signing on the dotted line. Most policies now cover Alzheimer's care, but make sure yours does, as Alzheimer's is one of the leading reasons that seniors need long-term care.