Long-term care insurance (LTCI) is a private- insurance option with pros and cons that are worth considering before you need long-term health care. LTCI's "sweet spot" is in providing protection for the middle-income folks who might not be able to or want to preserve personal assets and who do not qualify for programs such as Medicaid.
What does LTCI cover?
Cost for services such as home care, residency at nursing and assisted living facilities, and hospice care. Applicants must demonstrate a care need for at least two "activities of daily living" (eating, bathing, dressing, etc.). Coverages can vary widely. Most policies pay a set daily/monthly benefits they will pay out and specify a waiting period before you can claim benefits.
IS LCTI really necessary?
It is one option mitigate risk. Long-term care is expensive and constantly rises. One study (assuming a 3% inflation) projected annual median cost 2037 for shared-room nursing home care to rise $176,015 from $97,455 in 2017.
When does LTCI generally make The Most sense?
- When your net worth is between $200,000 and $2 million.
- You have a reliable long-term income.
- You want to protect assets such as your home.
- Your family history includes long-term illness.
- You don't want to rely on government programs.
- You are a son or daughter insuring parents who have assets to inherit.
When does it generally make the least sense?
- When your net worth is below $200,000, or above $2 million and your income is low or unreliable.
- You may not be able to afford any major premium increases.
- You don't have many assets to protect.
- You don't have any heirs or don't want to pass on assets.
When should I buy it?
Generally between 40 and 60. However, those with clean health histories may score affordable policies even in their 70s.
Are there exclusions?
Yes, and the exclusions for items like hospital care and pre-existing conditions can be numerous.