Shop Wisely For Long-Term Care Policy

Long-Term-Care Insurance is something you shouldn’t grow old without. It can mean the difference between living out your Golden Years on your terms and becoming a burden to your family or a ward of the state.

But securing the right level and type of insurance can be difficult. Simply finding a company that will insure you is getting harder; deciphering the differences between two seemingly identical policies (with very different premiums) can be challenging; and facing rate hikes once you get coverage is a real possibility.

Higher premiums, fewer options and varying costs

According to the American Association for Long-Term-Care insurance, average premiums on new policies — which help pay for nursing home, assisted living and home health care — have risen between 6% and 17% in the past year alone. Additionally, a number of insurers have as much as doubled their premiums on existing policies.

Some of the larger companies such as Prudential Financial and MetLife have even stopped selling new policies in the individual market. According to Limra International, an industry-funded research firm, 10 of the top 20 writers of individual coverage five years ago recently left the game.

Additionally, costs for basically identical coverage can vary widely. This could equal you paying up to twice as much for the same coverage as someone insured by a different carrier. Policies are loaded with industry jargon and an endless variety of options; making shopping around and comparing policies nearly impossible for the average consumer.

Navigating the waters

Getting the right coverage at the right price is possible if you follow a few simple rules.

        • Understand the three key factors — besides your age and health—the daily benefit, the length of coverage and the inflation protection you choose all impact your premium. It’s often advisable to choose higher daily benefits for a shorter time period.
        • Watch out for a rate increase — insurers can’t raise rates on individuals, but they can on a defined group of policyholders, with state approval. Look for insurers with strong financial statements, who conduct significant business in Iowa. If you’re hit with a rate increase, negotiate with your insurer.
        • Look for reimbursement plan and flexibility — with this option, the insurer reimburses you when you buy coverage.Look for a policy that includes an “alternate care benefit,” which provides future coverage for new trends emerging in long-term-care.
        • Look into the Iowa Long-Term-Care Partnership — this is a public-private partnership allowing you to pay for long-term-care through private insurance and Medicaid without using all your assets. Visit the Iowa Long Term Care Insurance Partnership’s website for more information.
        • Take advantage of tax breaks — Iowa allows for itemized medical and dental expense deductions to the extent allowed for federal income tax purposes.
        • Consider a hybrid — Permanent life-insurance policies and deferred fixed annuities packaged with long-term-care benefits can help cover the risk of spending much of your savings on nursing care.
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016.

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