The Importance of Long-Term Care Insurance

What is Long-Term Care Insurance (LTCI)?

Long-term care insurance (LTCI) is an insurance product, sold in the United States that helps pay for the cost of long-term care for your loved one or yourself. Long-term care insurance covers care generally not covered by health insurance, Medicare, or Medicaid.

LTCI is a valuable tool to help preserve family wealth while also getting the necessary care for a loved one who is elderly and possibly dealing with health issues.

“At the very least, home care becomes a statistically probable need for those who have the good fortune of living independently until age 81,” an article in The Sentinel reads.

According to the article, it’s customary that as someone becomes older, they will typically become tighter with their money and also potentially less open to a stranger coming into their home to provide services for them.  But, if someone invests in LTCI, that provides them with the possibility of home care and it would be foolish not to use it, the article reads.

The article lists some examples of elderly people suggesting death is a better option than growing old to the point of needing in-home assistance.

“Such statements not only insult the notion that life is a gift, but also ignore the reality that most people adapt and continue to value their life, despite becoming increasingly frail over time, or suffering a sudden disability,” the article reads. “Others believe that any insurance that does not involve an eventual pay-out is a waste of money.”

What Does Long-Term Care Insurance Include?

A hybrid insurance policy, which combines LTCI with a permanent life insurance policy, is a good option since it includes a savings-investment component that grows over time. A hybrid policy holder allows the insured party to withdraw funds from the policy, if and when needed for long-term care.

“If the cost of long-term care exceeds the amount paid in, the insurance will still pay out up to an agreed upon amount,” the article reads. “The life insurance benefit declines as the long-term care benefit is used. But if [someone] dies without having used insurance benefits to pay his long-term care, his heirs would receive a death benefit, so therefore the premiums paid into the policy are not wasted.”

A long time ago, LTCI was often called nursing home insurance. Data shows that 54 percent of new long-term claims in 2016 began in the home, a 3 percent increase since 2012 data.

“The association reported that 14 percent of new claims began with the claimant in an assisted living community,” the article reads. “Due to unusual licensing provisions in Pennsylvania, only around 3 percent of intermediate care facilities are licensed as Assisted Living Residences.”

Although commonly referred to as assisted living, most “assisted living facilities” are actually licensed as Personal Care Homes.