I have just turned 68, and my wife and I are trying to determine what is most important in a longterm healthcare policy. You stress the importance of getting the inflation protection, as well as being sure that we can afford the premium when we stop working. At our age (wife is 67) what do you recommend?

Assuming you are healthy enough to qualify for long-term care insurance, you will want to consider a monthly benefit that is large enough that you can make up the difference between it and the cost of care. At your age, you can consider 5% simple inflation which costs less than 5% compound unless you have exceptional longevity in your family or are in great physical shape but have Alzheimer’s in your family. Both of these characteristics can translate to a really long life and that makes the inflation benefit even more important for you.

I think we can easily expect the cost of care to triple in the next 20 years.  A 5% compound inflation factor will make the monthly benefit of the LTC insurance policy triple in the same time frame, whereas the 5% simple will make the monthly benefit double.

After determining the cost of care in area in which you expect to need care, then choosing a monthly benefit that is enough so you can make up the difference at claim time, you can choose the benefit period/policy maximum that is affordable.

If affordability is a problem at that point, you may be able to consider a facility only policy which costs significantly less than a comprehensive plan. The facility only policy doesn’t pay for home care or adult day care, but it pays for the beautiful assisted living facilities we see being built in so many places, which still makes a nursing home a last resort. Assisted living can be very attractive as spouses can stay together and it doesn’t look like a nursing home.

With further knowledge of your personal situation, I may be able to offer you some options. If you do not have a local insurance professional who specializes in long-term care insurance to help you, please email Rhonda@GotLTCi.com to set up a personal, no-obligation consultation with me.

Posted in: Consumer