Long-term care insurance is a smart decision for many people. It helps pay for long-term nursing home care or for health care assistance in your home when you get older. But far too few people choose to buy it.
Here are some guidelines to follow if you are thinking of buying LTC insurance
1) You only want to consider companies that have been rated ‘A++’ (by A.M. Best), which means they are of the highest financial strength. It also means that they won’t jack up the rates after a few years and they will cover you for either in-home care, nursing home care, or assisted living.
2) The prime age to buy is late 50s to early 60s. So if you have aging parents, talk to them about it.
3) You should not buy LTC insurance if you are very wealthy or very poor. ‘Very wealthy’ would be having investable assets of $3 million to $4 million. And ‘very poor’ would mean qualifying for Medicaid.
4) Make sure the benefit adjusts over time based on inflation. Medical inflation is higher than the normal inflation rate. You should look for an inflation level somewhere as much as 5% a year — because what seems like a good benefit today will look puny in 15 or 20 years.
5) Shopping for LTC insurance may be simplified by contacting an independent agent who can shop quotes from a variety of companies for you. Companies like AALTCI.org, LTCTree.com, and PrepSmart.com are all good starting points.
6) I used to say look for at LTC policy with a lifetime benefit. But that’s become cost prohibitive. Now I say look for a 5-year benefit with a 6-month waiting period upfront.
7) Adult kids of aging parents may want to consider paying the premiums on their parents’ policy themselves for 2 reasons: To protect their financial interest in any possible inheritance and to protect their parents against medical expenses they may face some day.
8) Wealthier families who don’t to see the legacy they wish to leave heirs get eaten up by medical bills may want to consider a hybrid policy, which combines traditional LTC coverage with potential life insurance benefits. You can read more about hybrid policies here.
Below is a list of companies that have been rated either A++ or A+ by A.M. Best. Special thanks also to Jim Hunt of EvaluateLifeInsurance.org for his feedback:
- Northwestern Mutual Life – A++
- New York Life – A++
- Mass Mutual – A++
- Mutual of Omaha Insurance – A+
Source: A.M. Best