Take a look at health insurance

For many Americans, getting insurance to cover your home, car, and health is standard practice. But long-term care insurance is a mystery to many, even though it offers important financial protection against certain uncertainties in life.

The purpose of long-term care insurance (LTC) is to protect the policyholder from paying the full bill of an extended stay in a healthcare facility, such as a nursing home or rehabilitation center.

Because there’s no telling whether you’ll need long-term care in the future and costs can add up very quickly, it’s worth learning about your long-term care insurance options and making an informed decision.

You may need specialized care later in life. For example, as you get older, your doctor may release you to a nursing home after hospitalization for surgery or illness. Fortunately, Medicare covers qualified stays of up to 100 days. However, sometimes deteriorating mental or physical health due to an accident, illness or dementia leads to a longer stay in a nursing home or continued home care. When this happens, even families in good financial shape may have to balance the cost of long-term care with their other priorities.

While Medicaid will cover long-term care costs after 100 days, this federal program requires individuals to exhaust their personal savings first, among other qualifications. For this reason, even individuals who are financially comfortable can carefully consider long-term care insurance.

Here are some factors to consider when considering long-term care insurance:

· Your age and health may affect your fitness. Purchasing a policy when you are relatively young and healthy can mean paying for more years, but it also helps you secure benefits that may not be available if you are older or have a health problem . The cost of a policy tends to increase with age, especially after the age of 60 when health problems become more common. If you have a pre-existing condition or a family history of a condition, you may not be eligible to purchase certain policies. Check the fine print carefully to see if any conditions are excluded from coverage.

· Long term care insurance comes in many forms, from barebones to all the bells and whistles. Price is just one factor to consider. Compare parts of the policies side by side to see which plan might make sense for you. Evaluate facilities and programs in your area so you can align your service expectations with what different policies can cover.

· Most plans are linked to the need for assistance with a predetermined number of activities of daily living (ADLs) such as dressing, showering and eating. You pay more if you want a policy that requires fewer concurrent ADLs to activate benefits.

· Consider the costs of nursing homes in your area to determine whether you want to purchase coverage at the high or low end of the spectrum. Choose a daily allowance – or the amount of expenses covered each day – that you can live with, as you are expected to make up the difference.

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· Most plans have an elimination period, which is the amount of time it takes for your insurance to cover the bill. This “gap” in benefits ranges from 30 to 180 days. You are responsible for 100 percent of the cost before your benefits begin.

· Inflation protection is a common part of the plan that can help offset rising health care costs by increasing your eligible lifetime benefits under the plan. It’s worth considering whether you can afford the cost of a more generous lifetime limit.

Your financial advisor can help you calculate whether your projected future income and assets can support the cost of long-term care if needed. When in doubt, long-term care insurance may be useful. Together, you can review your options and choose a plan that will help you achieve your long-term goals for financial security.