Four Simple Steps to Design a Long-Term Care Plan

An unexpected long-term care event can shatter even the most concrete retirement plans. Yet, many consumers do not include long-term care insurance in their financial plans, even though this type of coverage is designed to protect assets and independence.

Despite the obvious benefits of having long-term care coverage, a lot of people avoid buying a policy because they think it’s confusing and complicated. However, with the help of a specialist investing in a policy is actually quite simple.

When choosing a long-term care policy, the applicant only needs to make four simple decisions. These decisions include choosing a maximum benefit, a monthly benefit, an inflation feature and the waiting period.

First choose a maximum benefit, which is the total amount a policy will pay out. For example, consumers may choose to buy a plan for $100,000, $200,000 or more in care. This number is typically based on the period of time benefits will be received. It is recommended to start with a 2-year benefit period based on your premium tolerance. It is best to buy as much as you can comfortably afford both now and during retirement. You should compare various benefit options with your specialist.

The second decision involves picking a monthly benefit. This is the amount the insurance company will pay out monthly or daily. According to the American Association for Long-Term Care Insurance, the majority of policyholders receive between $100 and $200 in daily benefits. 

After the maximum and monthly benefits have been determined, people should consider inflation protection. Adding this feature helps plans stay current with on-going inflation rates. This rider is the most expensive feature in designing a plan, but it’s also the most important. You may not use your policy for years and you want your benefit to stay constant with the cost of care in the future.

 The final decision is the waiting period, also known as the deductible or elimination period. This is equal to a period of time. For example, if a 30-day elimination period is selected, the policy-holder will be responsible for the full cost of their care for the first 30 days. “Choosing a 90-100 day waiting period is a good way to keep premiums lower while limiting out-of-pocket expenses.

 Developing a long-term care insurance plan only involves making four simple decisions, but the expertise of a specialist will make these choices a lot easier. An LTC Specialist can help you choose a policy that offers the kind of protection you want at a price you can afford. In just four easy steps, you can create a long-term care plan that will guard your assets and your family from the ‘what-ifs’ of a long life.