How to choose the best long term care insurance plan for you

By Kathryn A. Mueller, CLU, ChFC, FIC, LUTCF
Insurance Advisor
Wisconsin Medical Society Insurance and Financial Services, Inc.

You probably have read all about the importance of having long term care insurance as part of your overall financial plan. However, many questions come up when looking for the best policy. How much do I need? What are the actual costs of long term care services? How do I choose the right company?

First off, no insurance company has the best policy for everyone. The best policy will be determined by your age, your health status, the type of plan you are looking for and whether or not your spouse will also be applying for coverage.

The average cost of nursing home care in Wisconsin is approaching $70,000 per year. With that in mind, you may be looking at a $200 per day benefit. However, many people are willing to pay for part of their care; they just don’t want to self pay the total cost as it could affect their retirement income stream. More important is having an inflation benefit added to your policy. This insures that your benefits will go up 5% compounded each year; a nice hedge against inflation.

When is the best time to buy long term care insurance? Now! The price of long term care insurance goes up as you age. A 50 year old can expect to pay half of what a 65 year old will pay. As you age, your health status may also change. The time to buy is when you are healthy. But don’t worry if you have some health “challenges.” Most companies will consider coverage, perhaps with an increased price. If you are diabetic, but not on insulin, consider purchasing long term care right away. Once insulin is required, underwriting rules change and it will be much more difficult to secure coverage.

How do you reduce premiums?

• Consider a longer elimination period (how long you pay for your own care before the policy kicks in). A 90-day elimination period could save you 40 percent vs. a 30-day elimination period.
• Consider a 5-year or 10-year benefit vs. a lifetime benefit. Since the average stay for long term care in a nursing home is 2½ years, the shorter benefit may be all that you need. However, if you have a family history of dementia, you may opt for a longer benefit period, since dementia patients tend to require coverage longer.
• Look for a policy that offers integrated benefits. This type of plan covers not only nursing home costs, but assisted living, home health care and adult day care. Most long term care needs are met outside of the nursing home. When you have a long term care insurance policy, you make the choice of when and where the services will be provided.

Other suggestions
When looking for an insurance company, make sure that the company is highly rated (A rated or better from A.M. Best). You will also want to make sure that they have been in the long term care insurance business for a number of years.

Look for an agent that can offer many different companies to choose from. They can find the best plan based on your needs and your health status. The Wisconsin Medical Society Insurance Services, Inc. works with several top long term care insurance companies. We can help sort through all of the options that will best serve your needs.

For more information, call the Wisconsin Medical Society Insurance and Financial Services at 866.442.3810 or complete our on-line contact form.