Understand facts when planning long-term care

An important consideration when planning a successful future retirement is longevity. Longevity includes long-term health care. The financial costs and burdens of aging not only affect you, but also your family, savings and lifestyle. Long-term care insurance makes life easier for you and your family. The American Association for Long-Term Care Insurance said the country’s insurance companies paid $9.2 billion in benefits to American families in 2017 alone.

If you search the Internet, you may find information that is not entirely accurate. It’s important to consider a few facts before you retire.

The U.S. Department of Health and Human Services states that if you reach age 65, you have a 7 in 10 chance of needing some form of long-term care. In 2016, the value of unpaid caregivers’ help to people with Alzheimer’s disease or dementia exceeded $230 billion.

Many people think that Long-Term Care will not happen to them. Others think that their family will be able to take care of them without any problems. The fact remains that as medical science advances, the risk of needing care increases with lifespan. Without a pre-planned plan, the impact is huge.

The national average for a year of home care is $49,192 based on a 44-hour work week. The national average for assisted living is $45,000 per year, and a year of skilled nursing costs nearly $100,000 per year. These costs will certainly increase in 20 years.

You should consider the financial costs and burdens of aging as part of your retirement planning. Affordable long-term care insurance provides the means for quality home or institutional care that allows the family to be family.

Nearly half of people who apply for LTC insurance after age 70 are rejected because of their health, compared to 17 percent for those under age 60. Premiums are very affordable, especially if you are younger. Acting before retirement is key.

The premiums are intended to remain the same, based on your health, age and the amount of benefits you claim. You can read articles about rate increases. These increases are related to “legacy products”. These are older series of policies that were priced before the rate crash and rate stabilization.

First, most long-term care insurance plans are designed to have equal premiums. There are some policies where the premium goes up each year, by design, as the benefits increase or you choose to increase the benefits. However, most policies have premiums that are intended to remain the same based on your age at the time of application, your health and the amount of coverage you have chosen. Since most people will choose some sort of inflation protection, the intention is that the premium will stay the same while the benefits increase – the cost of the inflation benefit is already factored into the premium. When reading articles about rising premiums, keep in mind that there are plans that intentionally go up over time.

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Today, all subscriptions are priced considering the very low interest rate environment (interest rates in the United States have been low for the past decade). This was not always the case. Some of the older series of products have had tariff increases. Those increases were based on a number of factors:

• Interest rates

• Lapse rates (ie how many people drop their policies. In practice very few do, but this was not factored into the premium price on many older plans)

• Claims and underwriting experience

Today, acceptance is much more scientific and conservative than before. Premium costs now also take into account low interest rates, low lapse rates and actual claims history. The Society of Actuaries suggests that the likelihood of a rate increase on a long-term care policy sold today is very, very low. Regardless of these facts, it is also not easy for insurance companies to raise rates on the products sold today.

When you work with a long-term care specialist, you get the right information you’re looking for. There are several research reference websites:

LTC News offers articles and resources: http://www.ltcnews.com

US Department of Health and Human Services: https://longtermcare.acl.gov/

Long-term care affects you, your family, your savings and your lifestyle. Long-term care insurance is convenient and affordable asset protection. These plans not only protect your savings, but also reduce the burden on family members. Trade before you retire to take advantage of lower premiums and your overall better health.