As the costs of not only healthcare but also long term care increase every year, more people are looking into purchasing long term care insurance. Long term care insurance can not only help pay for your or a loved one’s long term care, but can also bring peace of mind. It can’t help you if you don’t know how to buy it! We’ve got your step by step guide.
When to Purchase Long Term Care Insurance
When you purchase long term care insurance is almost as important as where you buy it. The earlier you purchase a policy, the lower your rate will be. On the subject of good health – it’s important to purchase long term care insurance before you actually need it. If you wait until you’re already sick or injured, you’ll either pay a higher rate or may be declined.
Want a specific time frame? According to the American Association for Long-Term Care Insurance, the best time to purchase long term care insurance is when you’re in your 50’s.
Keep in mind:
- Your age and your health will impact your premiums the most.
- If you’re in good health, many insurers will give you discounts.
- The cost of your premium is based on your age at the time you applied.
- Premiums increase annually about 2-4% when you’re in your 50's but 6-8% when you’re in your 60’s.
- As you age, your health generally declines, which results in higher premiums when applying.
Buy What You Need & Can Afford
In the case of long term care insurance, it’s better to be underinsured than not insured at all. Buy what you feel you need but don’t buy more than you can afford. Too often people purchase elaborate, expensive policies that they end up having to cancel in a few years because they can’t afford the premiums.
Here are several ways you can save some money on your policy and get the best fit from day one.
- Rather than getting coverage for several years, get a 3-year plan.
- Choose a policy with a longer waiting period.
- Choose a policy that only covers crisis care.
- If you’re married, get a policy that allows you to share coverage with your spouse.
- Choose a lower daily benefit amount.
- Lower the inflation protection on your policy.
Like any insurance policy, it’s important to shop around and compare rates. If you’re already carrying life or health insurance, your carrier may offer you a multi-policy discount on your long-term care policy. Before you choose a company, make sure they’re a good solid company that offers what you need at a price you can afford. Check them out with A.M. Best Company or Standard & Poor’s (S&P).
Tip: Only choose a company that has an A rating.
Compare not only insurance companies but plans as well. Make sure you get a policy that includes inflation protection. Lastly, but most importantly, read the fine print and know what you’re buying.