Why Long-Term Care is More Important Than Life Insurance
Long-term care insurance is considered by many to be a luxury. Others opt for life insurance policies to protect their loved ones after they pass. As health insurance consultants in Houston, Texas, we understand that long-term care insurance is by far more important than the alternative.
Today we’re exploring why this type of coverage is important and what type of benefits you can expect when you choose it over life insurance.
What is Long-Term Care Insurance?
Long-term care insurance (LTC) covers long-term care services required by individuals in their home, community, or in a private facility. It can cover personal and custodial care as well. These policies are built on a daily reimbursement amount that is pre-selected by the insurance choice of the individual.
For example, if you require an in-home nurse to care for your daily needs like bathing, eating, and dressing, your long-term care insurance policy may state they will reimburse you for up to $50 a day. If the amount exceeds that price, you could pay out of pocket to cover the costs. The good news is, this greatly reduces your overall financial burden, allowing for a significant nest egg for funeral expenses and inheritance.
There are limits on many LTC policies, specifically on how much or how long they will pay. Some pay for long-term care costs for up to five years, while others pay for these costs throughout your life regardless of costs. Only a hand full have zero limits on pay out or policy length.
You can work with our health insurance consultants team to identify a wide variety of care options that you may potentially need on your plan.
As mentioned, there are a wide variety of plans available for long-term care insurance. Coverage is dependent on the policy selected. Some important areas of distinction include:
- Ability to hire whomever you like. Some policies require you hire a certified home care agency or licensed professional, while others allow non-licensed providers to receive a payout.
- Facility limitations. You may be required to use a certified facility for your care under certain plans. Others may allow you to enjoy care at home.
- Specifications on nursing home coverage. Some will provide full coverage for rehabilitation and 24/7 personal care coverage. Others will only cover the cost of room and board.
- Assisted Living care. This is covered under most policies.
- Home modifications. Requirements for installation of ramps or other handicap-friendly equipment is typically covered under a long-term care insurance policy.
- Additional coverage options. Many policies provide flexibility for future services that could become a part of your policy.
Each of these services may sound excessive to a younger healthy individual, but they are necessities for many elderly adults in Houston, Texas. Planning ahead by signing up for these plans while still healthy can provide relief from hefty financial burdens that come with long-term care needs. They also provide real benefit for those investing in the policies, in contrast with life insurance which doesn’t pay out until after a death.
Benefits of Long-Term Care
In addition to the covered services listed above, there are countless benefits of long-term care insurance. Unfortunately, few people realize the importance of this type of policy. Life insurance may seem to be all that’s needed to provide for your family, but what happens before you pass can be financially devasting. Preparing for the worst by opting for this coverage can prove to be a well-thought out decision for any family.
Analyzing the difference between life and care insurance reveals that the benefits heavily favor care insurance policies.
For example, long-term care provides massive cost savings. With the right health care consultants, you can look for deductibles that lower your premiums, “health” discounts where applicable or share your policy with a partner to reduce costs.
Overall, however, long-term care provides a safety net if and when you require it. Paying out of pocket for these expenses can add up quickly. In-home health care starts at around $700 and climbs as high as $3,000 per week. A policy that covers those costs provides peace of mind.
Another difference is LTC plans provide immediate payouts. There’s typically very little, if any, waiting period for benefits. Pay attention to your plan, however, as exclusions apply.
While life insurance is typically more expensive for older individuals, long term care insurance is much more affordable. It is ideal for people aged 55 and older. This is especially true since 70% of people who reach age 65 will need long term care.
Inflation protection is another benefit of an LTC. Life insurance plans don’t increase with inflation. The amount you sign up for is the amount you get at payout. An LTC provides a defense against inflation by adjusting their payout according to market rates.
LTC plans also provide coverage for many health care services that aren’t covered under health insurance like assisted living or adult day care. A boarder range of coverage is appreciated by those who need immediate care.
Long-term Care Vs. Life Insurance—Which is Right for You?
Selecting a new insurance plan isn’t easy. It requires forethought and may feel like you have to see into the future to get it right. However, with long-term care insurance, you don’t have to get it exactly right. Unlike with life insurance, LTC plans are more likely to pay off. Many life insurance plans end up forfeited, while LTC’s are used.
Compared: Life insurance & Long-term Care Insurance
Life insurance pays out the amount of the plan you buy into and does not increase with inflation. Long-term care insurance does the opposite.
Long-term care insurance provides for your family and takes care of financial care obligations. Life insurance only pays out when you die.
Illnesses such as Alzheimer’s require hundreds of thousands of dollars in care expenses. There’s a good chance you and your family will deplete your savings before a life insurance policy would ever pay out. Long-term care insurance provides the coverage you need throughout your illness, thereby protecting your family.
Life insurance may not be necessary if you don’t have dependents or enough money to cover burial costs. Long-term care is much more necessary for coverage.
Life insurance is extremely expensive in comparison with the benefits it offers. It often takes months or even years for claims to be accepted, unlike the higher rate of acceptance for long-term care insurance plans.
For more information about why long-term care insurance is more important than life insurance, please contact us. As health insurance consultants in Houston, Texas, we will happily answer your questions so you can make an informed decision.