Purchasing long-term care insurance is rife with uncertainty and questions. How much do I need? What is this type of insurance anyway? Should I purchase LTCI before or after I retire? Do I even need this policy?
According to June Walbert, Certified Financial Planner with USAA Financial Planning Services, many military members don't think they need long-term care insurance as military retirees are covered by a lifetime retirement pension. A pension will go a long way to defray the military member's expense of assisted living, but it won't cover everything, including a spouse's needs. And while the military provides excellent health benefits for its retirees, long-term care benefits are not included.
"Checking your long-term care insurance options should be part of your retirement planning," Walbert says. "If assisted living or nursing home care becomes a necessity, not having a plan to pay for the expense can be a devastating blow to a family's savings and investments." If you're still not convinced that you need LTCI, Walbert recommends that you ask yourself the following questions:
- Who will take care of you - or your parents - if long-term care is needed?
- Would your children be willing to care for you full time?
- What assets to you have to pay for long-term care?
- How long would your savings last if faced with paying for long-term care?
- If you or your spouse needed care, how would you pay for that care?
- Do you have a family history of chronic illness?
- Do current age and health conditions make you a good candidate for an affordable policy?
If you answered, "I don't know" to any of these questions then it's time to consider purchasing LTCI. However, you may not fully understand how the product works for you. Here, Walbert answers the most commonly asked LTCI questions:
Q: What is long-term care insurance?
A: Long-term care insurance is coverage for care or assistance in a nursing facility, in a home, or in a community environment.
Q: How can you determine if you need long-term care insurance?
A: Purchasing long-term care insurance makes sense if you want to:
- Protect assets from being used up by long-term care costs.
- Stay independent financially as you age.
- Protect family members from paying for your long-term care.
- Maintain choices in selecting long-term care.
- Provide "peace of mind" if there's a family history of chronic illness.
Q: When should you consider purchasing long-term care insurance?
A: You should think about long-term care insurance sooner rather than later, as you are likely to qualify for better rates when you are younger and in better health. A good time to consider long-term care insurance is when you're about five to 10 years from retirement.
Q: Are there varying choices of long-term care insurance to consider?
A: Most long-term care insurance providers offer choices that can be tailored to fit your needs, such as options that allow spouses to share benefits or ones that ensure your benefit increases every year. Make sure you work with a company you trust to get guidance on what choice is right for you, since the options can be confusing.
Q: What is the average cost of long-term care insurance premiums?
A: Many factors go into determining long-term care insurance premiums, including your age, health, and family history. To give an example of what costs to expect, a comprehensive policy purchased at age 55 will average about $100 a month in premiums. Assuming the servicemember is still in good health, that same policy purchased at age 70 will cost more than $500 a month.
Q: How can you purchase long-term care insurance?
A: Ask your insurance company or agent if they offer long-term care insurance, or you might be able to purchase it through a civilian employer. Don't be afraid to ask questions about LTCI. Understanding this benefit is important to you and your family.