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Long-Term Care Insurance (LTC)
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Overview: So the need for insurance depends on your financial status.
Did your ancestors have chronic health porblems or other conditions that required prolonged care. Care Cost: 2005: National average for a Private Room in a nursing home: $74,000 (Source: MetLife) Between 2004 and 2008, nursing-home costs are projected to rise by 5.6 percent a year, and 5.9 percent for four years after that. In 2003 nursing-home day rates range from $96 in Shreveport, La., to $420 in Alaska. Most facilities also require an up-front fee, which may range from the equivalent of one month's charges to tens of thousands of dollars; it may or may not be partially refundable if a resident leaves. In 2021, when today's 60-year-olds might need such care, the average rate will have risen to about $480 a day, or $175,200 annually. (Consumer Reports - CR)
Home-health aides charge $18 an hour, on average. Hiring one for eight hours a day costs $144.
Studies showing the need for long term care varied from 37% to
more than two-thirds of individuals 65 and older will require some kind of long-term care." See 40 Must-Know Statistics About Long-Term Care Medicare only pays for 100 days and after 20 days you are responsible for a co-payment (now $105 a day).
Recommendations - Insurance: "A CR investigation, for which we reviewed 47 policies, reveals that for most people, long-term-care insurance is too risky and too expensive. As with health insurance, you must keep paying to keep it in force. If premiums rise, you may have to drop the coverage, possibly losing everything that you've paid. The policy's benefits may cover only a portion of the total expense. Many policies are packed with catches that can keep you from collecting. Finally, there's no guarantee that long-term-care insurers, some of which have weak balance sheets, will be around 20, 30, or 40 years from now when you need them to pay."If you buy too young new systems for care may emerge that will not be covered by a policy. Wait till your 50 yrs old (Sac Bee) or 65 yrs old (CR) to buy. If you buy later than age 70, the policy will likely be too expensive.
Costs: Premiums escalate as you age. For example in 2012, a plan that costs a 55-year-old couple $2,405 annually will run a 60-year-old couple $2,970 annually. A 55-year-old single person would pay an average of $1,480/year, 60-year-old $1,790 and a 65-year-old $2,360. Most policies allow for premium increases. A single friend who bought insurance before she was 60 had her premium almost double at 66 and then increase again at age 68. The second increase went from $2,950/yr to $4,250/yr. A 43% increase for a 16% increase in coverage, to $152.000 per year for a nursing home or $209 per day for homecare.
Options:
Get at least four or five quotes from different companies that are highly rated for financial strength by leading ratings services, such as A.M. Best, Fitch Ratings, Moodys, Standard & Poor's, and TheStreet. Over 70 percent of people today buy a 3-to-5 year benefit period,
Things to consider in a policy:
Books:
Sources: Return to Finance
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