Long-Term Care Insurance Grows In Popularity

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

After exploring the different kinds of provisions, such as inflation protection or a steady rate, Sneddon purchased a policy that will hold some value even if she stops paying for it, but can only be used for long-term care. "My thinking on this was, I'll go ahead and get this policy and pay on it while I'm working. It accrues a maximum worth of benefits. If I quit working, my income goes down and I quit paying for it, I'll still have a certain amount of money solely for long-term care. If I never need long-term care, then the money is gone."

Long-term care policies have a reputation as somewhat of a luxury item, and Sneddon said she thought it would be difficult for most people to afford long-term care insurance. Honey, however, thinks that they're aimed at a middle-class individual.

"If you're a low-income individual with very few assets, you would probably qualify for Medicaid if you needed long-term care," he said. "If you're a very wealthy individual you should be in a situation where you would be able to self-fund a situation where you would need long-term care. I think these are kind of a midrange type of product."

Honey cited his mother, a retired teacher, who purchased a long-term care insurance policy in her early 60s. A few years later her financial situation improved to the point where she decided to let her policy lapse and cover any long-term care needs that she might have out of her personal finances.

Slome said that while a person with little or no savings would have to depend on Medicaid, those with more income can make a personal choice. "If you have some savings, $150,000 to $200,000 or more, then you really need to look at some modest coverage," he said. Millionaires, on the other hand, can choose whether they want to purchase a policy or pay out of personal finances if the need arises.

"The thing I tell people," he said, "is that some coverage is better than no coverage. You should approach the purchase of long-term care insurance the same way you approach other insurance protection."



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