Pros & Cons of Long Term Care Insurance

Our brokers at Hyers and Associates specialize in health insurance and can help you sort through what’s best when it comes to traditional long term care policies.

If we only knew what was in our future, decisions would be so much easier.

You don’t want to spend money on something you don’t need. And you don’t want to need it and then be unprepared. Let’s take a look at some of the pros & cons of LTC insurance.

The Pros

1. Peace of mind is the main reasons most people are interested in a traditional long-term care policy. You don’t want to worry about what will happen to you and your loved ones with such a big expense lurking.
2. No one wants to be a burden on their children, families, friends and loved ones. Many parents would prefer to have long term care insurance cover the costs (and time) associated with prolonger health care needs.
3. Flexibility in coverage is an advantage for long-term care insurance policies.  For example, you can choose how much coverage you want to have per month, or how long you’d like to be covered.
4. Start coverage in your 50’s or 60’s. The earlier you start coverage on a long-term care policy, the more likely you’ll be able to pass the required medical underwriting. Once you have been approved the policies are “guaranteed renewable” and cannot be taken away unless you don’t pay your premiums.
5. For lower rates apply for the insurance when you are younger. Rates can increase as the years go on, however. This is why some of our clients purchase fixed payment hybrid long term care annuity and life insurance plans.
6. Leaving your spouse with the assets she or he might need and an inheritance to you families. There’s not much that eats up estate like prolonged LTC expenses. Insurance solves that problem and protects your life’s work for the ones you want to provide for.
7. Most plans include inflation protection. We know that the future cost of care is only going to increase. Have a policy that compounds at 3-5% each year is almost a necessity.

The Cons

1. Passing medical underwriting can be difficult, especially if you wait too long. Once pre-existing conditions show up, they may keep you from qualifying for the insurance. About 30% of the people that apply for the insurance fail the health assessment and/or receive much higher rates.
2. There is a long list of health issues that insurance companies use to decline applicants. There’s an even longer list that will cause your rates to be more at onset. Sometimes it’s not just one thing, but the combination of several risk factors.
3. The cost of long-term care insurance can be prohibitive, especially for those in the middle-income bracket. Rates have been increasing. Long-term care insurance is disappearing for middle-income people as rates are too high. The high risk is causing many insurance companies to stop offering long-term care insurance.
4. If you qualify for long-term care benefits, there is frequently a period of time before your benefits can begin. This is called a “waiting period’ and it acts like a deductible. Most policies have a 90 day wait, but some are flexible and let you choose the time. Shorter durations usually increase the cost of the policy.
5. Most policies are capped in how much they will pay out. You get to choose the duration and benefit pool of your policy, however. It is unusual to see plans that pay indefinitely due to cost and risk.
6. If you do not use the policy, or if you cancel the policy, you and your family may not get any money back. This issue is difficult for many after paying premiums for many years. That’s why hybrid policies have really taken off in the marketplace.

For Other LTC Options and Strategies, Call Us!

If you are interested traditional long-term care insurance, we can help you. We can also show you hybrid insurance policies – both life and annuity driven coverage.  Other strategies can include using your Health Savings Account (HSA) or Medicare Medical Savings Account (MSA) to cover your potential long-term needs.

If you are considering a traditional long-term policy or are interested in what other options are available, we’ll be happy to walk you through all your options. Contact us today to learn more.