Six Key Factors to Consider When Shopping for Long-Term Care Insurance

Decisions regarding your long-term health should always be considered carefully.

A woman and her elderly parents smile as they look at a laptop together.
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Navigating all of life’s curveballs can be one of the hardest parts of responsible life planning. No one can predict exactly what life will throw at them or where exactly they’ll be five, 10 or 20 years down the road. Thankfully, products like insurance can help cautious individuals plan for life ahead, giving them peace of mind even if the worst-case scenario never actually occurs. 

One such insurance is long-term care insurance, which can help cover the costs of long-term care that may not be covered by your health insurance. Whether it’s due to aging or the result of a debilitating illness or disability, individuals who require regular care for the long term — or expect that they may in the future — may benefit from purchasing a long-term care insurance policy.

However, not all policies are created equal, and careful consideration should be given to a number of factors before making a decision. To help, the financial leaders of Kiplinger Advisor Collective discuss those factors below, as well as how you can find the best policy for you and your needs.

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Whether your benefit payments increase over time
“One major factor to consider is whether or not your benefit payments increase over time. For instance, $5,000 a month in benefits now is a lot different than $5,000 a month in benefits 20 years from now. Another factor to consider is how long the benefits are paid for, as well as if the company has the right to increase premiums in the future. You would also want to know what that increase may look like.” — Bob Chitrathorn, Wealth Planning By Bob Chitrathorn of Simplified Wealth Management

How you want to handle a long-term care event
“I think even before shopping for long-term care insurance, it is important to think about how you want to handle a long-term care event. For example, where do you want to receive care, who do you want to provide your care, and what resources do you want to use to pay for your care? Since many older Americans prefer to age in place, consider including inflation protection and benefits for home care.” — Marguerita Cheng, Blue Ocean Global Wealth

Kiplinger Advisor Collective is the premier criteria-based professional organization for personal finance advisors, managers, and executives. Learn more >

Customizable vs 'out of the box' solutions
“Long-term care policies allow you to customize the coverage. Don’t accept ‘out of the box’ solutions. Instead, customize your long-term care policy to suit your needs, focusing on what costs you won't cover personally. You rarely need to cover 100% of these costs for 100% of the time you might need care. Tailor the policy to handle what you're unwilling to cover.” — Greg Welborn, First Financial Consulting

Any ongoing costs that would need to be paid
“Long-term care insurance can be helpful during retirement, but it can also be expensive depending on the benefits that are provided in the policy. People should look at policies from different insurance carriers and the monthly benefits they offer to get a sense of the ongoing costs they would need to pay.” — Mario Hernandez, Longevity Wealth Management

Daily vs monthly benefit coverage
“A daily benefit long-term care policy may trigger untimely out-of-pocket expenses due to an overage of services provided in a day. Selecting a monthly long-term care benefit helps smooth expenses and reduce unwanted out-of-pocket daily expenditures. Have discussions with your loved ones early on regarding topics like your well-being and their future availability. Identifying what you value most enables you to select long-term care coverage that’s best for you.” — Dr. Preston D. Cherry, Concurrent Financial | Center for Financial Wellness - UW-Green Bay

Alternative solutions to rising premiums
“Retirees should understand that their premiums could increase dramatically as they age. Retirees should consider long-term care annuities or hybrid long-term care insurance through life insurance, as the premiums tend to stay the same and reduce the cost of long-term care to a fraction of what it would be out of pocket, and use a long-term care insurance agent to help find the perfect policy.” — Shawn Plummer, The Annuity Expert

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The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

Kiplinger Advisor Collective

Kiplinger Advisor Collective is the premier criteria-based professional organization for personal finance advisors, managers, and executives.