The annual cost for a sample LTC policy, where the insured had a "preferred" rating, a daily benefit of $250, a 90-day wait period, an unlimited benefit period, an unlimited benefit amount, compound inflation protection of 3% and a waiver of premium, was a bit more than $6,900. That same policy would cost the couple $11,000 per year if they waited five years to buy it, or $19,200 per year if they waited 10 years, or $65,900 per year if they waited 20 years.
- What am I trying to accomplish with this type of insurance protection?
- Not being a burden to my family is one objective.
- Others include protecting assets (how much and what?); having a choice of care providers or sites of care; and staying home at all costs.
- How much money could I afford to pay toward my care, should I need it?
(It's important to factor in retirement income only and any need to also support a spouse or partner. Do not use employment income.) - How much does it cost to receive care in the retirement or family location that would be desired?
- Then how much more will I need the insurance to provide so that spouse can still live well and other estate planning goals get met?
- Add the automatic inflation protection to the LTC insurance policy (5% compounding is best for younger folks under 70).
- How much can I afford to pay in retirement for this insurance?
- Do I really want to be able to pay family to provide care
(consider being incontinent and having family help you)? - If I don't want family or friends, do I want to be able to pay anyone and not necessarily a certified home care worker or agency?
- This will answer whether a reimbursement policy (a policy that pays for the actual cost of care) or a disability-based indemnity policy (one that pays the daily or monthly maximum) is appropriate