What is Long Term Care?
Long Term Care is a specific type of healthcare designed to meet a person’s health or personal needs over either a short or long period of time. Typically, one will require Long Term Care if they can no longer perform everyday activities on their own. There are several types of Long Term Care, but the three main types you might need include:
- Home Care - This allows an individual or couple to remain in their own home. A professional caretaker comes to the home for a certain length of time each day to provide care.
- Assisted Living - Assisted living facilities offer less medical care than a nursing home and emphasize residents' independence.
- Skilled Nursing - Nursing homes offer the highest level of medical care and personal assistance but less freedom and typically have higher costs.
How much does Long Term Care cost?
Long Term Care costs vary depending on where you live. Since we are based out of the greater Los Angeles area, here are the average costs in Los Angeles according to the 2019 Genworth Cost of Care Survey:
- Home Care - $80,300/year or $6,692/month
- Assisted Living - $54,000 or $4,500/month
- Skilled Nursing - $109,500 or $9,125/month
Average annual costs for Nursing Home, Assisted Living, and Home Health Care are from the Genworth 2019 Cost of Care Survey, conducted by CareScout® and used with permission. All rights reserved
How likely is it that I will need Long Term Care?
While there is no guarantee that you will need Long Term Care, the odds are that you or a loved one will. Someone who turns 65 today has an approximately 70% chance of needing some level of Long Term Care at some point in their life.
5% of people age 50-64 need Long Term Care.
8% of people age 65-74 need Long Term Care.
17% of people age 75-84 need Long Term Care.
42% of people age 85 and up need Long Term Care.
Source: American Association for Long-Term Care Insurance report of data from leading sources including AARP. November 2019.
Why should I look into Long Term Care insurance?
Long Term Care can be unexpected and expensive. Imagine working hard to come up with plan to retire with a certain budget. If suddenly, monthly expenses were to jump significantly due to Long Term Care, you could run into financial trouble. Even if you have a lot saved up, Long Term Care could cause you to prematurely deplete your retirement assets and other investments.
Long Term Care insurance is a way to mitigate the risk of needing Long Term Care later down the road. A Long Term Care insurance product will pay out if you end up needing Long Term care and could prevent you from depleting your assets or running into financial trouble.
Decisions to make when purchasing Long Term Care insurance?
There are 4 main variables or decisions to make when looking into Long Term Care insurance. Your decisions along with your health and age will determine the cost of your Long Term Care insurance.
- Monthly Maximum – the maximum amount your policy will pay out per month to help with Long Term Care
- Ex) $1,000-$9,000
- Benefit Period – the maximum number of years the policy will pay the monthly maximum for
- Ex) 1-5 years
- Elimination Period – the number of days you must pay out of pocket for Long Term Care until your policy kicks in.
- Ex) 90-360 days
- Inflation Protection – the annual inflation adjustment for your policy
- Ex) 0-5%
What types of policies are out there?
Most Long Term Care insurance policies fall into one of three categories.
- Long Term Care Insurance – This is Long Term Care insurance by itself. It protects you if you end up needing Long Term Care, but there is a chance you will not utilize this policy.
- Long Term Care & Life Insurance Hybrid – This is Long Term Care insurance combined with life Insurance. This policy will protect you if you end up needing Long Term Care, but will also pass down a Life Insurance Death Benefit if you do not utilize the policy.
- Long Term Care & Annuity Hybrid – This is Long Term Care insurance combined with an annuity. This allows you to leverage a lump sum of money and guarantee an enhance payout if you end up using the money for Long Term Care.
Where do I go for Long Term Care insurance quotes?
The best place to find Long Term Care insurance quotes is by reaching out to your advisor. Tori and I are educated and fully licensed to discuss Long Term Care insurance in California and would be happy to set up a complimentary Long Term Care review.
Click HERE to schedule your Long Term Care review with myself or Tori.
In good health,
Alex