Caring for Aging Family with Long-Term Care Insurance

October 14, 2021

Taking care of your aging loved ones can be overwhelming and expensive. Long-term care insurance can help defray the increasing costs associated with caring for elderly family. This becomes particularly important in the event they require a lengthy stay at a care facility. Policies for long-term care insurance can vary greatly, but generally speaking, they will help cover costs for in-home caretakers, assisted living, and nursing homes.

Costs of Long-Term Care Insurance

Long-term care insurance policies can be expensive, and the cost has only gotten higher over the last few years. The older you are, the more expensive coverage becomes. For that reason, it’s important to consider long-term care insurance well before it’s needed (ideally before age 65). In addition, it’s never too early to start thinking about your own needs and how you plan to protect assets and finance long-term care in your later years.

Without long-term care insurance, the costly expenses associated with long-term care are typically paid using out-of-pocket savings, assuming that you can afford to do so. Long-term care insurance may offer a good solution for those who are not able to set aside enough funds to pay for long-term care.

Many insurance products can provide a full suite of options for long-term care, ranging from long-term care only policies to life insurance policies with a long-term care benefit. Asset-based products are also available, giving a guarantee on the benefit amount with a return of premium. These products can vary greatly both in cost and benefits provided.

An Alternative Way to Plan for Parents’ Future Needs

As an alternative to long-term care insurance, you can opt to self-insure by setting aside money in a separate investment account so that funds will be available for your loved ones should they need significant care in the future. In the event your loved ones don’t need these funds, they are still yours to spend in other ways. However, it could be difficult to save enough money to cover the potential costs associated with long-term care, making long-term care insurance the preferred option to explore.

What to Look for in Long-Term Care Insurance Policies

Your loved ones (or you) may already have a long-term care insurance policy, or may be looking to put one in place. Either way, there are several things you should know regarding the policy:

• How long is the elimination period for the policy? This is the period of time that you are responsible for paying the full portion until policy coverage begins, and can range anywhere from 0-100 days.
• What is the policy’s maximum daily benefit? This is the amount a policy will reimburse for each day of long-term care. You will also want to know what is the policy’s maximum lifetime benefit, and whether it’s the total amount of time or money up to which benefits are paid.
• Is the benefit a reimbursement plan (meaning that all receipts must be saved for expenses incurred) or is it an indemnity plan (meaning that the benefit is paid automatically regardless of actual expenditures after the qualification and elimination periods)?
• Is there an inflation rider? If so, this could significantly increase the maximum daily benefit over time.
• Most importantly, who is an allowable caregiver under the policy? Does it require a licensed individual for a daily C.N.A. or nurse visit, or can it be a friend or family member that has stopped working to become the caregiver? Additionally, will the policy allow for adult day care or require an in-patient classification?

Are You Looking for a Solution to the High Costs of Long-Term Care?

If you’re looking for ways to manage the high costs of long-term care, consider the options available with long-term care insurance policies. Talk to First Western Trust today. We can help you navigate the strategies that are available to you.