Planning for Tomorrow's Needs: A Guide to Long-Term Care Insurance

Think of it as an extra layer of security for your golden years. Long-term care insurance is a specialized policy designed to cover the costs of care you may require if you experience a chronic illness, mental or physical disability (eating, bathing, etc.), or cognitive decline. These costs can be significant, encompassing:

• Nursing home stays: Skilled nursing facilities provide 24/7 care, but can come with hefty price tags. The median annual cost for a private room in a nursing home currently sits at over $116,000, according to New York Life.
• Assisted living facilities: These offer independent living arrangements with support for daily activities.
• Home care: In-home aides can assist with bathing, dressing, and medication management.

There are two main types of long term care you can purchase: 

(1) stand-alone long term care

(2) long term care as a rider on a life insurance policy

The six essential activities of daily living (ADLs) – bathing, dressing, eating, toileting, transferring (moving between bed and chair), and continence – serve as a key benchmark for long-term care insurance. When you are unable to perform a certain amount of ADLs, you likely qualify for long-term care benefits.

Think of them as a window into your current and future independence. Difficulty with any of these tasks signals a potential need for assistance, which is where long-term care insurance steps in. Most policies use limitations in performing these specific ADLs as eligibility criteria. 

So, if you require help with, say, dressing or bathing, it might trigger your policy's coverage, providing financial support for services like home care or assisted living. These ADLs act like a language understood by both your body and your insurance, helping determine your future care needs and ensuring you have the financial resources to address them, should they arise. 

• Bathing: Can you independently wash yourself, manage showering or baths, and perform basic hygiene tasks?
• Dressing: Are you able to put on, take off, and fasten all your clothes without significant difficulty?
• Eating: Can you feed yourself without assistance, including preparing food as needed?
• Toileting: Do you have control over your bladder and bowels, and can you use the toilet independently?
• Transferring: Can you move safely and independently between bed, chair, and other seated positions?
• Continence: Do you have control over your bladder and bowels, avoiding accidents or needing assistance with managing them?

These six activities, like milestones on a map, guide both your current level of independence and your potential need for future long-term care. If you encounter challenges in any of these areas, it might trigger coverage under your long-term care insurance policy, offering financial support for crucial care services, ensuring your well-being and independence are protected.

There are 4 main areas of concern when considering the type of long term care insurance to purchase and how much coverage you will need based on your medical history and current health.

• Eligibility: Most policies are available to individuals between 50 and 85 years old, with eligibility based on health (ADLs, etc.) and age.
• Premiums: You pay regular premiums throughout your coverage period, which can be fixed or increase over time. The average cost of long-term care insurance for a 60-year-old, according to Forbes, is $1,200 per year for men and $1,960 per year for women.
• Benefits: Once you meet the policy's defined need for care, your insurance kicks in, reimbursing you for a set amount per day or month for covered services. This can be used for care received at home, in assisted living facilities, or nursing homes.
• Benefit limits: Some policies have lifetime benefit limits, capping the total amount the insurance will pay out.

Life unfolds, and sometimes daily tasks like dressing or bathing might require a helping hand. While loved ones offer valuable support, long-term care insurance serves as an additional safety net. By understanding your six key activities of daily living (ADLs) – bathing, dressing, eating, toileting, transferring, and continence – you can begin assessing future needs. 

Long-term care insurance, triggered by limitations in these ADLs, offers financial freedom to choose your care, maintain independence, and age with dignity. Book a meeting with us today to learn more about your options and receive specific price points.