Long term care insurance is not as expensive as you may think. There are various options that can be used to customize a plan to fit your specific needs and budget. The cost of your coverage will depend on a number of factors including:
1. Your age when you apply
2. Your health
3. The amount of coverage you choose
4. Preferred health discounts, married, or even partner discounts with some companies such as John Hancock.
Many people have found innovative ways to pay the long term care insurance premium, such ways are:
Take a portion of the interest on a given asset such as a 100k mutual fund and you that portion to protect your whole portfolio.
Some people may choose to use the dividend income to pay the premiums
There are some solid fixed and variable annuity products on the market where you put say 100k in the annuity vehicle and again use the interest to pay the premium.
The ageless saying, “you get what you pay for”, applies in the Long Term Care market as well. Long-term care insurance is one insurance products that you do not necessarily want to get the best price on. There are over 100 companies that sell long term care insurance and out of those only about 10 are A+ rated and have paid over 100 million in claims. Out of the 10 only about 5 are the ones you’d probably want to consider. Genworth Financial, John Hancock, MetLife, Mass Mutual, New York Life, and Allianz.
An Example of the Cost Of Waiting:
Many people assume that they will save money if they just wait to buy long-term care insurance. This is absolutely untrue because Each year you wait several factors hurt you:
You will have to purchase more insurance because the cost of care rises each year.
You are a year older so your premium will increase and these companies come out with new rate structures every 2-3 years.
Your health could change leaving you with a much higher cost or even uninsurable.
The following example uses a long-term care insurance policy that includes $4500 monthly benefit, four-year benefit period, 90-day elimination period, and inflation protection with a major carrier.Bill, 50 years old, purchased insurance, the annual premium would be $1,638.75. If he paid this premium until he was 85 years old, he would have paid in a total of $57,330 in premiums.If he waited just five years to purchase the same policy the annual premium would be $2,374.37. The increased premium takes into account that Bill is now five years older and he has to purchase a higher daily benefit since the cost of care has increased. If he paid until he was 85 years old he would have paid in a total of $71,220.
By waiting five years cost Bill an extra $13,890 in premiums over his lifetime it did not save him a single dime. Another thing to consider is he was also uninsured for five years.
Can the companies increase my long term care insurance rates?
Yes, insurance companies can increase premiums if the increase is for an entire class of policyholders and it is approved by your states insurance commissioner. This is why you want to go with a financially strong company because the bigger companies are less likely to raise rates down the road. The companies we deal with have never done so in there history: Genworth Financial, John Hancock, MetLife, Mass Mutual, New York Life, and Allianz.
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