1. Will I save money if I wait to own a policy?
Waiting may cost you or prevent you from owning coverage. You pay more the older you are when you buy. A 45-year-old waiting to age 50 to purchase pays about 10% more over their lifetime – despite paying for five fewer years. Waiting also means you could experience a health event resulting in an even higher premium or prevents you from being able to own a policy at any price. If you are healthy and the premiums fit your budget, waiting does not save money.
2. How much coverage is enough?
It’s a balance – meaningful benefits and meeting your budget. The average policy we sold in 20171
provided about $141,500 in maximum benefits with a $3,800 monthly maximum, growing 3% each year. Based on national costs2, this covers 40.7 hours for a weekly home health aide, and 1 0 0% of assisted living facility costs. It won’t fully cover the $8,121 a month2 cost of a skilled nursing facility but this care is less frequent and of
shorter duration.3 $3,800 a month in benefits can help keep your finances from being compromised.
3. How much does it cost?
The greater your benefits, the greater your premium will be. In 2017 premiums ranged from $14.22 to $493.02 per month with the average being $163.66.1 20% were under $100 a month!
4. What are the tax savings?
You may be eligible for tax savings at both a state and federal level. Some states provide credits or deductions. Federal tax breaks are limited for individuals and generally greater for business owners or self-employed. Consult a tax advisor as tax laws can change.
5. How does it work in plain English?4
There are four primary parts to your benefits:
- Total Benefit – This is the total maximum amount available long-term care. For example, it might be $100,000, $300,000, or more at the beginning of your policy, but will grow over time. Your premium will be affected by the Total Benefit you select at the time of policy issue. Higher amounts will mean a higher premium.
- Monthly Payout Limit – the maximum payment you will receive while under long-term care. This typically ranges from $1,500 to $10,000. For example, $200,000 Total Benefit with a $5,000 Monthly Payout Limit would keep benefits going for 3 years 4 months. If you reduced the Monthly Payout Limit to only $2,000, coverage would lasts 8 years and 4 months. If you select a high Monthly Payout Limit, your premium will higher.
- Growth Rate – determines how quickly your Total Benefit grows. If Growth Rate is 3%, for example, here’s what policy values might look like for a 50-year-old couple:
- At inception, the policy has $325,000 in Total Benefits (as an example) and a Monthly Payout Limit of $4,500 per person.
- By age 80, Total Benefits for this policy have increased to over $788,000 and the Monthly Payout Limit has increased to $10,900 per person.
- By age 89, the Total Benefit exceeds $1,000,000 with correspondingly higher Monthly Payout Limit.
- Deductible – This is stated in days, not dollars. It’s also called the Elimination Period, a waiting period between the start of care and the first payment by your policy. 90-days is the most common.
6. Who can help?
We’d love to help you. Contact us to speak with one of our specialists. They will be happy to learn more about you and your situation, and give you their best recommendations.
Thank you in advance for your trust and confidence in helping you with this important topic.
Long-Term Care Specialists
- Policy premium and benefit averages based on LTCI Partners, LLC sales data, January 1, 2017 – December 31,
2017. Average policy maximum was $141,524 with average monthly benefit of $3,792.
- Genworth 2017 Cost of Care Survey, National Data. June 2017. National median costs; $21.498 per hour for a home health aide, $3,750 for a single room in an assisted living facility, $7,148 for semi private room and $8,121 for private room in a skilled nursing facility.
- 2015 Long Term Care Insurance Survey, Broker World Magazine, August 2015. Based on data from 2014 regarding claims dollars paid by insurance carriers who participated in the survey, 38.6% of those dollars went toward Nursing Home claims. 29.3% went to Assisted Living claims and 32.1% to Home Care/Adult Daycare claims.
- The long-term care insurance policy describes coverages under the policy, exclusions and limitations, what you must do to keep your policy in force, and what would cause your policy to be discontinued. Please contact your licensed agent for more information, costs, and complete details on coverage. Availability of policies, features, and benefits may vary by state.