Step 3. You’ve got to get some kind of long-term care plan in place. Without the formal structure of having a plan, it’s hard to gain an understanding of how your finances might look should the unfortunate happen. It’s impossible to navigate what’s going to happen to your finances should you have to pay for long-term care and there’s no plan in place.
Understanding your options
There aren’t millions of options on how you’re going to prepare yourself financially for long-term care needs and costs. There used to be a period of time when there were a number of long-term care insurance carriers with a multitude of insurance options to choose from. For the most part, the days of having unlimited choices are behind us. The number of large insurance companies still participating in the long-term care space has dwindled down to just four or five. What many insurance carriers found in the past is that they didn’t charge enough on those earlier long term care policies to help protect the insurance company from people collecting on their benefits. With that said, there are still a few viable choices for how you can protect yourself and your family should the need for additional medical coverage come later in life.
Option 1: Traditional long-term care coverage. Some of the bigger players that are still in the long-term care business include companies such as GenWorth, Hancock, TransAmerica and MetLife. They all offer some form of long-term care coverage. Essentially, what this means is that typically after 90 days, should you have the inability to perform two out of five common core tasks and require support, you should be able to start collecting your benefits. The benefits are typically expressed in how much these companies will pay per day. For example, $150 to $200 a day of coverage. In some cases, these policies will offer cost of living adjustments that increase your benefits over time. Finally, in most every case, these policies are quote unquote, use it or lose it. This means that you could end up paying premiums for these policies for life and if you never need long-term care coverage, you would die before ever receiving any benefits. These types of Long Term Care policies were about the only option for a long time, and we still come across an old policy or see a quote on a new one of these from time to time. They work for some, but frankly they aren’t our favorite tool for most of our clients.