Longevity is one of the main factors to consider when planning for a successful future retirement. With longevity comes long term health care. The financial costs and the burden of aging not only impact you, but also your family, your savings and your lifestyle. Long-term care insurance makes life easier for you and your family. The American Association for Long-Term Care Insurance said insurance companies across the country paid out $ 9.2 billion in benefits to American families in 2017 alone.
When you search the internet, you may find information that is not entirely accurate. It is important to consider a few facts before retirement.
The US Department of Health and Human Services states that if you turn 65, you have a 7 in 10 chance of needing some type of long-term care service. In 2016, the value of help provided by unpaid caregivers to people with Alzheimer’s disease or dementia was over $ 230 billion.
A lot of people think long term care is not going to happen to them. Others think that their families will be able to take care of them without a problem. The fact remains that as medical science advances, the risk of needing care increases with longevity. Without a prior plan, the impact is enormous.
The national average for a year of home care is $ 49,192 based on a 44-hour week. The national average for assisted living is $ 45,000 per year, and a year of skilled nursing costs almost $ 100,000 per year. In 20 years, these costs will certainly increase.
You need to consider the financial costs and the burden of aging when planning for your retirement. Affordable long-term care insurance will provide the resources necessary for quality care, at home or in a facility, allowing the family to be a family.
Almost half of people who apply for long-term care insurance after 70 are refused for health reasons, against 17% for those under 60. The premiums are very affordable, especially when you are younger. Acting before retirement is essential.
The premiums are intended to remain the same, depending on your state of health, your age and the amount of benefits you are claiming. You can read articles on rate increases. These increases are related to “legacy products”. These are older sets of policies that were priced before the interest rate crash and rate stabilization.
First, most long term care insurance policies are designed for flat premiums. There are some policies where the premium increases each year, by design, as benefits increase or you choose to increase benefits. However, most policies have premiums that are meant to stay level based on your age at the time of application, your medical condition, and the amount of coverage you have selected. Since most people will choose some sort of inflation protection, the premium is intended to remain stable as benefits increase – the cost of the inflation benefit is already factored into the premium. When reading articles about increasing premiums, be aware that there are plans that intentionally increase over time.
Today, all plans are priced taking into account the very low interest rate environment (interest rates have been low in the United States for the past decade). It’s not always the case. Some of the older series of products have seen their prices increase. These increases were based on several factors:
• Interest rate
• Lapse rate (ie how many people abandon their policies. In practice very few do, but this has not been factored into the premium pricing on many older plans)
• Claims and underwriting experience
Today, underwriting is much more scientific and conservative than before. Premium costs now take into account low interest rates, low lapse rates and actual loss experience. The Society of Actuaries suggests that the likelihood of a rate increase on a long-term care policy sold today is very, very low. Regardless of these facts, it is also not easy for insurance companies to increase the prices of products sold today.
Working with a long-term care specialist will give you the exact information you are looking for. There are several reference sites for research:
LTC News offers articles and resources: http://www.ltcnews.com
US Department of Health and Human Services: https://longtermcare.acl.gov/
Long-term care will impact you, your family, your savings and your lifestyle. Long-term care insurance is easy and affordable asset protection. These plans not only protect your savings, but reduce the burden on family members. Take action before you retire to take advantage of lower premiums and better overall health.