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Good news. The longer you live, the longer you live. Bad news. With each birthday you may lose the ability to take care of yourself physically, mentally, or both. Physically speaking, you may not be able to perform one or more of the “activities of daily living” (ADLs) like bathing, dressing, eating, toileting, or getting in and out of bed. Before that you may lose the ability to perform “instrumentalities of daily living” (IADLs) such as household chores, meal preparation, or managing your finances. Mentally, beyond common everyday forgetfulness, Alzheimer’s and dementia can rob you of the ability to recognize even your closest loved ones. Whoever said “growing older is not for sissies” was right.
Long-Term Care Challenges
If you cannot perform various ADLs or IADLs, then you will lose a bit of your personal independence. Take heart, however, as you are in good company. Some 70 percent of Americans who reach age 65 will require long-term care assistance, but many have no idea how to pay for it. And, yes, it is expensive. According to the latest figures from 2018*, the average annual cost of a private room in a skilled nursing facility is $100,375, and $48,000 for a one-room unit in an assisted living facility.
What is your plan regarding who will help you and where you will receive that help? How will you pay for it? In the end, will the only thing your children “inherit” be you? There are five options when it comes to paying for long-term care.
Some Payment Options
LTCi Features and Benefits
Traditional LTCi functions much like automobile insurance. You pay premiums, get nothing out of the policy unless you have some sort of damage to your automobile. Alternatively, in response to consumer demand, some LTCi policies are actually “riders” to life insurance policies. Eventually the policy will either be there for your long-term care needs or it will pay an income tax free death benefit to your loved ones. This death benefit can even be used to compensate a loved one who took time out of the work force to care for you before you needed full-time professional care.
Most LTCi policies share some common features and benefits. Here are a few you should know:
Buyer Beware!
Have you heard of the legal doctrine Caveat Emptor? Translated from Latin it means let the buyer beware. Perhaps look before you leap is another maxim expressing the same sentiment. When it comes to LTCi, the policy is only as good as the underwriting company. Accordingly, do your due diligence homework on the financial strength and reputation of any LTCi company under consideration.
Insurer Ratings
The Internet is an excellent source for information and, when it comes to insurance company ratings, it will not disappoint. Several of the established insurer rating companies are A.M. Best (www.ambest.com), Fitch Ratings, Inc. (www.fitchratings.com), Moody’s Investors Service, Inc. (www.moodys.com), Standard & Poor’s Rating Services (www.standardandpoors.com), and Weiss Ratings (www.weissratings.com). In addition, a treasure trove of information and resources about LTCi and insurers can be found at the National Association of Insurance Commissioners website (www.naic.org).
*Genworth “Cost of Care Survey 2018”
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