Tag Archives: Long Term Care Insurance

Why Women Pay More for Long Term Care Insurance

In the past year, consumers have watched Long Term Care Insurance providers roll out new products with new pricing models that usually cause some questions. One of the main questions that arises when people see the changes to some of the latest policies is: why do women pay more for Long Term Care Insurance?

Gender Based Pricing

Most of the bigger Long Term Care Insurance providers have now implemented pricing models that include gender based pricing. In other words, women pay more for a policy than men do. This price structure is practically brand new and isn’t for no reason. While some women may cry foul and accuse insurance companies of being unfair, the reality is, it’s the old prices that were unfair, not the new.

The principle that sets the entire foundation of insurance is risk. Every component of insurance is based on risk, from the actuarial tables to the underwriting standards to the premium rates. Since the Long Term Care Insurance industry began in the 70s, companies have wised up as to who poses a higher risk than others and they adjusted accordingly.  Women, unfortunately, fall into that category and are now facing the consequences.

Women Are High Risk

The average lifespan for women in the United States is 81 years, compared to just 76 years for men. It is a fact of life that women live longer than men and it should come as no surprise to any one. It makes sense, then, that their chances of needing long term care in their senior years are much higher, too.

Not only do women have more years of life during which they can develop the need for assistance in life, they are also more likely to be widowed. If men need care, there is a good chance their wives will be around to provide it. By the time women need help, their husbands are often deceased and unable to provide the care the wife needs. The disparity explains why women make up 70% of all long term care claims. On top of that, they account for around 80% of all nursing home residents.

Looking at Policies

Insurance companies have gotten wind of these statistics and understand the gap in risk between men and women. Subsequently, they raised premium rates for women to take into account the higher chance of a claim. The higher rates don’t apply to married women, though, because spousal pricing usually applies. Single women, on the other hand, are the ones who are hit the hardest by this new pricing model. Because they have no partner to turn to should they need care, they pose the highest risk to Long Term Care Insurance companies. Therefore, they pay the highest base rates.

This kind of pricing is no less fair than auto insurance pricing that jacks up the rates for teen boys or life insurance pricing that increases the rates for men. Insurance is based on risk, so adjusting for risk is an inevitable part of a growing and learning insurance market. To learn more about Long Term Care Insurance and whether or not it is right for you, click here.

Buying Long Term Care Insurance: What You Need to Know

Shopping for Long Term Care Insurance, just like shopping for any insurance, can be difficult. All the different companies, policy options, and benefit choices can be confusing for someone who isn’t sure exactly what they are looking at, but it doesn’t have to be that way.

Long Term Care Insurance can help provide you financial assistance in a time of serious need and preserve your assets at the same time, so it shouldn’t be overlooked or put off because of the buying process. The fact is, 7 in 10 American seniors will need long term care at some point, and a very small percentage of those seniors have long term care coverage. Buying a Long Term Care Insurance policy can put you ahead of the majority and in a place of financial security should the need for long term care ever come about. There are a few basic tips that can help you have the simplest and most rewarding shopping experience possible, so read our suggestions below.

1) Begin browsing early

Chances are if you ever need care, you won’t need it until your 60s, 70s, or 80s, but that doesn’t mean you should wait until then to buy it. On the contrary, the longer you wait to buy, the lower your chances of medically qualifying for a policy. By the time you have a need for care, it’s much too late to apply. Instead of procrastinating the purchase, start looking at policies in your late 40s or early 50s.

Get a good idea of your options and make sure you understand the differences between them all before you lock down and choose one. The best time to buy a policy is in your early 50s because age and health both have a big impact on the premium rates you receive. The younger and healthier you are, the lower your rates will be.

2) Look only at blue chip companies

As tempting as it may be, we don’t suggest buying from a small, local agency or anything of the sort. The biggest companies are the best for a reason; they have knowledge of the topic and experience and data to back it up. When you buy a policy from a blue chip company, there is almost no question that your claim will be paid should you ever submit one. If you buy from a smaller, lesser known, lower rated company, you may run the risk of running into problems when it comes time to submit a claim.

The large insurers have had time to adjust their actuarial assessments, change premium rates, and alter other estimates over the years in order to produce the best Long Term Care Insurance product. It’s always best to buy from a blue chip carrier. Buying from an independent agent who works with all the major companies is your best bet.

3) Choose Inflation Protection

Once you’ve decided on a policy, you must choose the additional riders that will go along with that policy. Truth be told, there is really only one rider that every person buying this insurance needs and that’s Inflation Protection. WIthout Inflation Protection, your policy is just another poor investment. There is no telling how much long term care will cost 20 or 30 years down the road, but Inflation Protection raises the value of your benefits to keep pace with inflation, ensuring your benefits don’t lose value over time.

When you look at the numbers, Inflation Protection will cost you more up front. In just a short time, though, the benefit’s growing value will have made the cost well worth it. Buying a policy without it simply isn’t a smart move.

Long term care brings about all kinds of unknowns, but fortunately, with Long Term Care Insurance, how you will pay for care doesn’t have to be one of them. Read more about the basic components of Long Term Care Insurance or find out if a policy is right for you here.

The Basic Components of Long Term Care Insurance

If you’re thinking about buying Long Term Care Insurance, chances are you know what it does. Long Term Care Insurance is designed to shield assets from the rising cost of long term care, which often causes sticker shock to those who are paying out of pocket. Long story short, long term care is not cheap. Far from it, actually, and the cost is growing annually. If you understand the financial risk posed by long term care, it’s likely that Long Term Care Insurance is on your list of things to buy.

So, you know what a policy does, but do you know how it works? There are a few basic components of a Long Term Care Insurance policy that are crucial to understand and be aware of before you make the decision to buy.

1)    Benefit period – The benefit period is the length of time that your policy is slated to last. Typical choices include 3 years, 5 years, and 10 years. Unlimited benefit periods were once an option in the past, but no longer. They were simply not profitable for Long Term Care Insurance providers who found they were taking heavy losses on these types of policies. A few insurance providers still offer 10 year benefit periods, but most have cut the maximum down to 5 years. Choosing your benefit period, like the rest of the components, is crucial to how much your policy will cost. Industry data has found that about 85% of claims last less than 5 years, so a 5 year policy is enough to hedge against the majority of the risk. A 3 year benefit period is a good option, too, if you are trying to make the policy more affordable but still shield from the main risk.

2)    Elimination period – The elimination period is essentially the deductible of your Long Term Care Insurance policy. The elimination period signifies how many days of care you must receive before your insurance benefits kick in. You usually have the option to choose between 0 and 180 days. 90 days is the most common choice because most people can afford to pay for 90 days of care without making any huge changes to their lifestyle. Once the 90 days are up and you are still in need of care, you will begin to receive your benefits from the policy. The elimination period, like most deductibles, has a big impact on how much your policy costs. If you think you can afford to pay for care for longer, you may want to lengthen the elimination period to help shave off some cost off of your premium rates.

3)    Daily benefit amount – The daily benefit amount indicates how much monetary value of care you will receive every day. The average daily cost of care varies by geographical region and city, so it’s crucial to research how much care costs in your area before deciding on your specific daily benefit amount. The average daily benefit amount is $150 per day, but it is significantly more expensive in the Northeast and on the West coast.

Familiarizing yourself with the moving parts of a Long Term Care Insurance policy can help you decide what kind of policy you want and how much you are going to pay for that plan. Other factors that influence cost are your age and your health, so buying when you are younger and still in good health is always the best option. The best time to purchase a policy is when you are in your 50s. Waiting until your 60s will cost you significantly more and can possibly rule out your chances of qualifying for a policy, depending on your health.

To learn more about Long Term Care Insurance and how to know whether or not a policy is right for you, click here.

Assessing Your Risk of Long Term Care

If long term care seems like a far off concept to you, you aren’t alone. The majority of Americans aren’t thinking about long term care or the threat it poses to their retirement assets, but the reality is, the threat is looming whether you are thinking about it or not.

As with any insurance, risk varies from person to person. That is why most people put off planning for long term care; they view themselves as part of the low risk group and therefore, don’t see long term care planning as something that applies to them. Unlike most insurance areas, though, the risk of long term care is actually quite high.

Government studies estimate the risk of long term care to be 1 in 2 for the general population in the United States. Once an individual reaches the age of 65, that risk goes up substantially to 7 in 10, which makes sense. As we age, we become more fragile and susceptible to chronic illnesses that could land us in the hospital or cause us to need help with daily tasks like dressing and eating. People dread the thought of themselves as old and fragile, though, so planning for such a situation is often pushed into the back of their mind, sometimes until it is too late.

It’s not uncommon for people to wait to plan for long term care until they need it. By then, it is much too late. It’s essentially impossible to get long term care coverage once you have been diagnosed with any sort of condition that requires it, which is why planning ahead is vital. The risk isn’t the same for every one, though, so consider these three aspects to help assess your risk and determine the best way for you to plan for long term care.

1) Family history – One of the best indicators of your risk for chronic diseases, your family history can help you know whether or not you have a higher chance of developing certain conditions. Of course it’s no guarantee, but certain diseases like heart disease, stroke, diabetes, and Alzheimer’s have genetic influences. If your family has a long history of any of these diseases, it’s likely not in your best interest to avoid the subject of planning for this risk.

2) Current health – Your current age and health can help you predict where you will be in another 5, 10, or 15 years. Are you struggling from medical ailments right now? Do you already have some sort of manageable chronic disease? If so, planning for long term care should be a high priority. The more medical conditions you have, the less likely you are to qualify for long term care coverage. Waiting will only decrease your chances.

3) Diet - The food we put into our bodies has a huge impact on our current and future health. Even if you have a family history of heart disease, you can help yourself avoid the same fate by eating a healthful diet rich in plant foods like fruits, vegetables, beans, and legumes. All of these foods are full of fiber and antioxidants, low in fat, and lacking in cholesterol. Consuming a diet high in fatty foods like processed sweets, red meat, and cheese can increase your risk of heart disease and may even increase your risk of Alzheimer’s, according to a recent study that found cholesterol affects risk of dementia.

Understanding your personal risk for long term care can help you make the decision as to which long term care planning route is best for you. Long Term Care Insurance can be a great tool to add to your retirement portfolio, especially if you already know that you are at risk of needing long term care later in life.

Read more about determining your long term care risk here.

Consider Long Term Care Insurance for Your Aging Parents

Too often, we get calls from panicked people who are looking for help for their aging parents. Most of the time, the calls sound something like this: “My mother had a stroke last week and the doctors say she will need long term care for at least several months – How can I apply for coverage for her care?”

Don’t Wait Too Long

Unfortunately, we have to break the news to these children that it is too late to apply for coverage. Once a medical or health problem like stroke, a bad fall, or Alzheimer’s diagnosis has already occurred, there is no chance of qualifying for Long Term Care Insurance. It makes sense because there is no question of risk at that point, and insurance is all about risk. Once the risk has become 100%, it would be bad business for a company to write a policy for someone who already needs care.

Since those individuals who need long term care but didn’t plan ahead for that type of situation are unable to qualify for a policy, there are a couple of different routes they may take. They might turn to a family member for care, they might spend their own assets on care, or if they have already spent through their assets on care or don’t have enough to cover the cost, they might enroll in Medicaid and receive care from the federal government. None of these three options are ideal for any one, which is why planning ahead for this kind of care is so crucial.

Start Thinking Early

If you are an adult with aging parents who haven’t yet considered how they will cover the cost of long term care should they need it, you can help them plan by looking into long term care coverage. By buying a policy, not only are you protecting their hard earned assets from the growing cost of care, but you are also helping ensure you won’t have to provide long term care for them down the road, which can disrupt your life and place a huge amount of guilt on your parents. Most parents don’t want to burden their children with their care, and Long Term Care Insurance can help them avoid that situation.

Policies don’t have to be frighteningly expensive. In fact, they can be quite affordable. It’s important to buy as early as possible, so don’t wait until your parents are close to needing care, because their chances of qualifying will be slim to none by that time. Because your parents may never actually use the policy, it’s vital to strike a good balance between benefits and cost.

What About You?

Working with an independent agent can help you find the policy that is right for your parents. While you’re at it, you might want to look for yourself, too! The best age to buy Long Term Care Insurance is in your early 50s, when you are still in good health and can therefore get lower premiums than if you bought later in life. To read more about who should buy Long Term Care Insurance, click here.