Building an LTCI Policy You Can Afford, Part 2

In our last post, we discussed the importance of checking out the rates at several different insurance companies before buying long term care insurance. There are also several factors within the policy itself that you can adjust to make the purchase more affordable.

The Policy

Don’t start out expecting LTCI to pay all of your expenses. Trying to do so will make your premiums extremely expensive, and most insurance companies won’t end up approving claims for every expense you think they should. Think especially about three factors: length of coverage, elimination period, and daily benefits.

While a lifetime benefit period may seem desirable, it tends to be extremely impractical. Some insurers no longer allow this option, and others price it so high as to be out of reach. Most people do not need more than five years of coverage, so purchasing 2-5 years is recommended.

The elimination period is the amount of time you pay before the policy benefits kick in. If you can use your own assets to cover the first few months, the policy will be more affordable.

The daily benefit you choose will have a big impact on the price you pay. The more the insurer anticipates paying out in the future, the higher the premium you will have to pay up front. Look at costs of LTC where you anticipate retiring to see what you will need. Remember, the further away your silver living, the more prices are likely to increase, but you can purchase inflation protection as part of your plan to cover that likelihood.

Discounts

If you are purchasing for two, you may be able to get a discount for buying two policies. Married couples may also choose to get a policy together with a shared care benefit. That gives the two of you a pool of money together; the drawback is if one person requires care sooner than the other, the money can be gone before the second partner needs it.

Some insurers will also offer up to 8% off if you make payments annually instead of monthly. If you have the ability to do this, it will save you some money overall. Be sure to ask if you qualify for any other discounts, as well.

To reiterate the most important piece of advice – shop around. All of these different factors – including the factor of your own health – will add up to different premiums at different companies. Adjusting these components of your policy will help you to purchase LTCI in your price range, but there are other important factors to consider when making a purchase. We will discuss other aspects of LTCI in a future post.

About the author

Amanda Dean

Amanda Dean is an expert in senior care with almost two decades of experience. After graduating from Cornell University with a degree in Human Development, Amanda was selected for the highly coveted role at NYU Langone Medical Center as a Geriatric Case Manager. She then founded and ran the largest independent local senior care advisory in NY for 12. Amanda joined Silver Living as the Senior Editor in 2012.