This article is intended to provide some general information and suggest a two ways that you can make this protection far more affordable than you might think.
Take Advantage of Insurer "Sweet Spots"
The sweet spot on a tennis racket or golf club is the location where you get the most power from your stroke. With long-term care insurance, the sweet spot is where you get the most protection for the least cost.
Finding the sweet spot is especially important when you look for long-term care insurance. That's because your cost is generally set for the life of the policy (though this is not a guarantee). And, because it almost never pays to change policies or insurers down the road. Policy costs are based on your age when you apply and your health.
So, you want the best cost for the best protection from the get-go.
Each insurer sets their own rates based on the type of clients they seek to attract. The company with the lowest cost for a 55-year-old married couple, may not be the least expensive for a 55-year-old single individual or, for that matter, a 64-year-old married couple. For example, a recent comparison of rates from four insurers (Genworth, John Hancock, New York Life and Northwestern Mutual) for a 55-year-old found that virtually-identical coverage from Northwestern would cost almost $1,000 a year more.
There are two kinds of insurance professionals who offer long-term care insurance. Agents generally represent only one company (which may indeed have the best offering). Brokers typically are independent and can represent multiple carriers. They can shop the market.
An important question to ask whoever you contant is whether they will be comparing policies and how many they are looking at before recommending a solution.
Your Good Health Today Can Save You 10% to 20% Each Year
Drivers without accidents and tickets pay less for their auto insurance. Individuals with few or no current health conditions pay less for their long-term care insurance. Insurers generally offer a 10% deduction.
And, best of all, this good health (some call it preferred health) discount is locked in. That means, you don't lose the savings when your health changes. And, as you get older, it will change.
A study conducted by the long-term care insurance industry's trade organization in 2008 revealed the percentage of applicants who qualify for good health discounts. It's clearly to your benefit to start the process at younger ages, certainly while in your 50s.
Percentage of Applicants Who Qualify for Good Health Discount
Age of Applicant Average Who Qualify
Under 30 63.2%
30 to 39 66.3%
40 to 49 66.8%
50 to 59 51.5%
60 to 69 42.2%
70 to 79 24.2%
80 and Over 12.9%
Bottom line, an educated consumer always has an advantage when buying any financial product. Long-term care insurance is offered by between 40,000 and 50,000 insurance agents, financial planners and stock brokers. They should be willing to provide cost comparisons and explain ways you can save without any obligation. After all, it's in your best interest ... and theirs.
To find a comprehensive online directory of over 3,000 insurance professionals who can assist with your long-term care insurance needs, visit the Consumer Information Center of the American Association for Long-Term Care Insurance.
THREE WAYS TO SAVE
*Choose a firm that has staying power. More than 100 companies sell LTC insurance, but only a few have done so for at least 15 years without increasing the premiums. Though premiums can increase with state regulatory approval, many firms have a history of stable pricing.
*Consider a policy that offers cash benefits. Traditional LTC policies specify exactly what types of care are covered and pay only for those services. "Disability model" policies pay cash and let policyholders who are eligible for benefits, use the money as they choose - say, to finance a nursing home stay or for in-home care. You even can keep the money and let a family member look after you.
Important: Benefits in excess of a specific amount ($250 per day for 2006) may be taxed as income. This tax threshold should increase in future years.
*Buy a policy when you are young. The sooner you buy, the better the rates are for the life of the policy. If you do wait until your health begins to deteriorate, the expense will be higher still - if you are healthy enough to qualify at all. Although buying LTC insurance is worthwhile even for older people, attractive LTC rates are available to those in their 30s and 40s.
Example: A 40-year-old could buy a policy from one of the top companies that pays $6,000* per month in benefits for a total benefit amount of $360,000 (with a 90-day elimination period before benefits kick in). The annual premium would be about $300. The annual premiums for the same type of policy could be $1,500 at age 60 and $3,000 at age 70.
Helpful: Most carriers allow a 30-day grace period after a birthday to get coverage based on your previous age.
SPECIAL OPTIONS FOR COUPLES AND FAMILIES
Get a couple's discount whether or not you and your partner are married. Insurers are offering discounts to unmarried - including same sex couples.
Examples: Genworth provides a 40% discount for couples who live together ... Prudential offers a 30% discount to couples if both partners purchase policies.
Prudential and MetLife even extend their couples' rates to multigenerational cohabitates, such as a mother and adult child who live together. Smaller discounts typically are available when only one partner applies or qualifies for coverage.
*Share the care with your spouse. Married and unmarried couples can save money with a "shared-care" plan.
Example: You buy a shared-care plan with eight years of coverage. If you need only five years of long-term care, your spouse will have three years of coverage available. This should lower your cost, since one eight-year shared-care plan is cheaper than two separate policies.
Both Craigallen & Ranju Kumar are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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