Group Health Insurance
Health care reform
Health Savings Accounts (HSAs)
Individual Health Insurance
Long Term Care Insurance
Medicare related coverage
10-18-2008 by Colleen King
Long Term Care insurance is going to be an essential part of your financial/retirement planning portfolio, because despite what you may think, the government is not going to take care of it. They’re struggling now to do what they are supposed to, and it doesn’t look like it’s going to get better anytime soon.
Many people think this is something you get in your late 60s or early 70s. You can, but the problem is that rates are significantly higher at that point, and there’s always the risk that you may have developed something rendering you uninsurable.
The time to really start looking is in your late 40s or in your 50s. Reasons why:
Rates will be lower; for with each birthday, the rates will go up.
When you have no health conditions, you may qualify for a 10% ‘preferred health’ discount with most carriers. That can add up to worthwhile savings.
If you are married and you both apply there is usually about a 25% spousal discount. So you buy two policies for about 25% less each! Unfortunately, as we know, once you hit the ‘older years’ you risk one spouse possibly passing away and you lose that possible discount. Or, one of you may not qualify for coverage, so you lose the spousal discount possibility.
Case in point–I recently had two requests for quotes. My initial presentation was for a $170/day benefit, 5% compound interest inflation protection, a 3 year benefit period, and a 90 day elimination period. One lady was 52, the other was 72. Standard rate, without any discounts, not taking into consideration the possibility of a preferred health discount. The 52 year old woman’s rates per year were $2329/year. The 72 year old woman’s rates were $7800/year! And those were the least expensive rates from the three companies I queried.
So even though $2300+ a year is not cheap, long term care costs in California at this time can be as much as $80,000 per year, or more. Compare $2300 vs. $80,000. All of a sudden, it seems manageable doesn’t it?
Also, while carriers won’t guarantee it, the majority of the time carriers will not raise rates on existing policies. So locking in that $2300/year could be helpful in a few years as you are looking to retire and your income is going down.
So at least do some checking; you can’t make a good decision without good information. If you have an agent you trust, get a quote or if they don’t sell long term care insurance, ask for a referral to an agent that does. And if you’re in California, I’d be glad to help you.