Long-term care insurance can be an excellent investment in your future – after all, none of us know what’s going to happen as we get older, and should you require ongoing nursing care at some point you’ll need to find a way to fund that treatment. However, that doesn’t mean that the process of choosing between the different long term care insurance companies will be an easy one. Not all policies are created equal, and there are a surprising number of pitfalls that can befall the unwary investor. So, how do you avoid making a mistake when choosing the right provider for you?
Don’t Assume Group Cover is The Best Deal
If you’re thinking of buying a long-term care policy through your employer, you might want to reconsider. It’s often possible to obtain better benefits at a lower cost if you buy your policy individually. Long-term care insurance policies that are individually underwritten usually offer a significant discount for being partnered or married and for being in “Preferred” health. These discounts could up to 40% or even 50%. These discounts are rarely offered with group policies which come at a standard rate. Also, group policies often have lower benefits for care provided within an assisted living facilities or at home, and this can represent a benefit reduction of up to 50%. Individual policies, on the other hand, always provide policyholders with the option of being able to receive all their benefits in every type of setting.
Don’t Confuse The Two Kinds Of Inflation Protection
Typically, long-term care coverage is available with two kinds of inflation protection: Future Purchase Option and Automatic Inflation.
Many buyers aged under 65 make the huge mistake of choosing a policy that offers only the Future Purchase Option rather than the Automatic Inflation option. With the automatic inflation option, the benefits increase each year by a chosen factor while the premium remains level. With Future Purchase Options, however, the premium starts out lower but then increases once you decide to purchase more coverage. Trying to keep up with the rate of inflation will then mean that your premium, eventually, will work out much higher.
Don’t Buy The Wrong Amount Of Cover
The cost of long-term care averages to around $6,000 monthly. So, doesn’t that mean you should buy that value in benefits? Not necessarily. Costs vary depending on where you live, so you need to work out what the cost of long-term care will be in the area in which you’ll be retiring. Also, bear in mind that there may be other sources of income like your pension which could supplement your costs.
Don’t Choose The Wrong Provider
When you take out a long-term care policy, you might not make a claim for several decades. However, you need to be confident that your chosen provider will still be around in the future should you need to make a claim. Choose a stable, large company which you can depend on.
Follow this advice, and you should find that you invest in the right long-term care policy for you, without falling foul of the pitfalls.