Simplifying Mysteries Surrounding Long-Term Care Insurance

According to industry statistics, nearly 70 percent of U.S. adults will require some sort of personal assistance after age 65. This alone makes a strong case for long-term care insurance as a means to ensuring optimal care throughout one’s senior years.

Purchasing long-term care insurance is a critical decision that requires education, forethought and proper attention. Yet, this type of insurance is multifaceted and often misunderstood—both by consumers and even their trusted advisors. Indeed, we at American Business find that financial advisors and CPAs often are bombarded with long-term care promotional materials for an array of long-term care products. From company to company and product to product, there are significant differences, so it’s no wonder that confusion in this realm abounds.


What Does Long-Term Care Insurance Cover?

Most long-term care policies sold today are comprehensive, meaning they generally allow a policyholder to use their daily insurance benefit in an array of settings that include:

  • The home
  • Adult day service center
  • Hospice facilities
  • Respite care facilities
  • Assisted living facilities and nursing homes
  • Alzheimer’s special care facilities

In a home setting, comprehensive polices generally cover these services:

  • Skilled nursing care
  • Occupational, speech, physical and rehabilitation therapy
  • Help with personal care, such as bathing and dressing

Some policies even cover some services like housekeeping and meal preparation. Every individual and family has their own unique set of circumstances. Policies differ – sometimes considerably – as do providers, so be sure you align yourself at the front end of the discovery process with an experienced and independent long-term care insurance specialist to determine the best solution for your unique needs.

That said, what are some broad strategies that can help you navigate and simplify this often confusing subject?

  1. Start educating yourself today. Some of the core questions you’ll need to address include:
    • Who is long-term care insurance designed for?
    • How does the long-term care benefit actually work when it’s needed?
    • Who pays for care provided under a long-term care policy?
    • Who provides that care?
    • Where is that care provided?
    • Are premiums guaranteed?
    • What is the difference between traditional long-term care insurance and hybrid long-term care coverage?
    • Is there a death benefit associated with long-term care insurance?
    • What happens in the event of a critical illness?
    • Is return of premium important?
  2. Determine the amount of coverage you will need. Don’t buy more insurance than you think you need— you may have enough income to pay a portion of your care costs and you may only need a small policy for the remainder. You also may have family members willing and able to supplement your care needs. Similarly, don’t buy too little— that will only delay the use of your own assets or income to pay for care. You can usually decrease your coverage, but it is more difficult to increase coverage, especially in the case of declining health.
  3. Determine the cost you can afford to pay. Typically, the longer the waiting period is before benefits activate, the lower your premiums will be. Yet, there are caveats, and it pays to work with a long-term care specialist who can help guide you through the ins and outs.
  4. Research and consider different options and talk with an experienced and independent long-term care specialist before finalizing your decision.
  5. Don’t feel pressured to make a purchase decision. Whomever you work with should demonstrate patience, understanding and a willingness to answer all your questions and provide any and all additional information you may need to make an informed decision.

As we said before, long-term care insurance is an exceptionally broad topic; every piece of information you may read or hear about begs exponentially more questions. Yet this insurance is crucially important, and for all the steps we listed above, we firmly believe that the pursuit of it should be taken alongside the right insurance partner—one with the experience, insight, relationships, independence and service model to identify optimal long-term care insurance solutions.  

The team at American Business works closely with high-end investment, accounting, legal and risk management firms and their clients to provide an array of independent and sophisticated insurance protection, college planning and estate planning solutions. Our Two Client Philosophy™ is the cornerstone of our business model. We can help design and deploy the right insurance solutions to meet specialized needs and serve as a valued resource at every step along the road to retirement

Do you have questions about long-term care insurance, or other life insurance matters? Please contact American Business at 212-359-4400 or email