The need for continual care will likely arise as you age or experience a chronic medical condition or a disability. Long-term care encompasses various services that assist individuals with medical treatments and even ordinary everyday activities.
Depending on your health and financial situation, you might need care services provided to you at your residence, a nursing home or an assisted living facility. Long-term care insurance could be an option to help cover the expenses of these services.
How long-term care insurance works
Long-term care insurance bridges the gap where regular health insurance and Medicare do not cover care expenses. This type of policy provides reimbursement for care services if you meet certain criteria, generally, if your health is in serious decline from conditions such as dementia.
A long-term care policy typically kicks in once the policyholder requires assistance with two or more activities of daily living. Examples include bathing, dressing, eating, using the toilet and transferring from beds or chairs. The policy covers various services in your home or in some kind of assisted living arrangement.
The need for long-term insurance
Though this kind of insurance is worth factoring into your estate plans, it is not for everyone. Individuals with substantial assets may opt to self-fund their care needs. However, long-term care insurance can protect assets and provide more care choices if you cannot afford high out-of-pocket expenses.
While long-term care insurance can provide financial protection, it is not without drawbacks. Premiums can be costly, especially for older applicants or those with pre-existing health conditions. Additionally, premiums are subject to rate increases, which could strain your budget over time.
The good news about long-term asset planning is that a variety of choices exist. You may opt for a long-term care policy that combines with life insurance or an annuity to assist your asset goals. Thorough evaluation of individual circumstances, financial resources and policy options is necessary to make an informed decision.