Long-term care insurance should be treated as an investment in your future well-being and independence. It is also an excellent way to protect assets you want to pass on to a spouse, children or grandchildren.
Like all good investments the sooner you start the better. Premiums for long-term care insurance are based upon your age at the time of purchase and amount of coverage. It is possible to purchase a policy that would cover two years of care in a nursing home or at home for less than $750 per year at age 45. But the same coverage would cost over $3,100 per year at age 70. With inflation protection which is included, in the examples above, not only is the annual premium much lower at a younger age, the benefits will also grow from the initial $110,000 to almost $750,000 by age 75, the time many people need care. While the value of your benefits grow every year, your premiums should not increase due to age or declining health. So investing in a long- term care insurance policy makes sense at younger ages because, the premium is lower, you are most likely healthier and, therefore, more likely to be accepted for coverage.
If you have a modest income and limited assets, long-term care insurance may not be a wise investment for you. Here are some questions you should consider before looking at specific long-term care insurance policies:
1. Is this type of insurance a wise investment for me?
2. Can I afford it, both now and many years from now?
In general you should not have to change your lifestyle in order to pay long-term care insurance premiums. One good rule of thumb is to make sure that the premiums are less than 20% of your disposable income (the amount of income left after all essential bills are paid).
3. Can I meet the eligibility requirements, given my age and health status?
Later in life (the 70s and 80s) your health may begin to fail and more chronic conditions may arise. It is then that people's attention to long-term care risk becomes much more sharply focused. Many people begin to worry, and some become scared. But at this point, buying long-term care insurance becomes much less feasible, because of the high cost of premium and/or not being insurable due to these chronic conditions.
"Sorry, You're Not Insurable"
For some reason, many consumers don’t understand that long-term care insurance is sold to healthy individuals. Those who wait until they develop symptoms or conditions that are likely to lead to a future disability, will discover too late, that they cannot obtain coverage. This is another reason to buy this insurance at a younger age.
Many applicants who put off purchasing this coverage are stunned to learn that, after the insurance reviews their medical records, they determine that the applicant is not a good risk. “But I’m in good health for my age, I can climb stairs and play golf. I just have some blood pressure problems, have a little diabetes, and my memory isn’t what it used to be.
Despite the applicant’s self assessment that he or she is “just fine”. They are likely to be told that because of "multiple medical conditions," are not insurable.
It makes sense for “baby boomers” to think seriously about insurance before they become old. In many cases the best time to start such insurance is in your early fifties, when you are apt to be least interested in the issue. That's also when eligibility is most likely, and costs are lowest.
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