Long-Term Care Insurance Grows In Popularity

by Joanna Kauffmann  on Monday, Apr. 25, 2011 12:00 am  

A traditional life insurance policy that includes long-term care benefits is designed a little differently, so that long-term care benefits are a percentage of the death benefit. "For example," Wage said, "if the death benefit is $100,000 and a percentage of 4 percent is paid, the monthly benefit generated would be approximately $4,000 ($131.50 daily) over 50 months, equaling $200,000 in benefits."

Annuities allow consumers to choose benefit periods of three, six and nine years and are usually available for those aged 40 to 80.

Policies can vary, too, in what services they cover. Most cover the cost of home care as well as that of nursing care facilities. "Coverage is broad," Wage said. "Benefits can be paid for skilled services, home health aides and personal care attendants, homemaker services, chore services, hospice care and adult day care. Other benefits are also available, such as respite care, caregiver training, equipment and home modification and alternate care. Facility care can include assisted-care facilities, nursing homes and bed reservation benefits."

Jesse Slome, executive director of the American Association for Long-Term Care Insurance, said that there was a basic formula for determining how to buy.

"You look at how many dollars you want per day in care times how many days you want it," he said. "That becomes the multiplier to figure out how much money your initial pool of benefits is. Then you add a growth option. Your pool of money today grows into the future." For example, a 55-year-old person who wanted $150 a day in care for three years and chose a provision for inflation growth at 3 percent annually would have an initial benefit pool of $169,000. At age 70, the value of that person's protection would be $263,000.

Slome said that planning for the future could be deeply personal and difficult to confront, but he said it was important to get a head start. "Here is the thing that consumers don't know and that they need to know: You must look at this while you're healthy and can qualify. People are not aware of that."

The sweet spot, Slome said, is between ages 55 and 62. "If you plan later than that, there's a very good chance that you will not have qualified," he said. "Seventy percent of 80-year-olds that submit an application are denied."

Experience as Caregivers

Emily Sneddon, a partner at the Little Rock law firm of Mitchell Blackstock Ivers & Sneddon, said her experience as a caregiver for her parents influenced her decision to purchase a long-term care policy. In that way, she is typical.

"When I spoke with my insurance agent about purchasing long-term care insurance, he told me the majority of his clients who inquired about this were middle-aged people who had been caregivers for their elderly parents," Sneddon said.

Sneddon began shopping for long-term care by acquiring information from the Arkansas Insurance Department. "I decided I wanted to go with a company that wrote a whole lot of other insurance business," she said. "A company with a lot of assets, because when all the baby boomers start making claims on this policy, it's going to be huge. I wanted a company that had the assets to be able to pay this."

Sneddon purchased her policy from State Farm, where she also has other kinds of insurance.



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