Long-term care insurance is a smart decision for many people, but it does have its advantages and disadvantages. Long-term care insurance is a type of insurance that covers needs that other insurance plans do not cover, like nursing homes and day-to-day care. To learn more about the advantages and disadvantages of long-term care insurance, keep reading.
Overview of Long Term Care Insurance
Many people need care when they get older. Some people do not have family to take care of them. Others have needs that far surpass what their family can provide and are safer in a nursing home. However, most insurance companies do not pay for nursing homes or in-house care assistants. Long-term care insurance is meant to cover those services. It works like any other type of insurance. You pick a company and plan that you like. You then apply and, if accepted, pay an annual premium in exchange for financial assistance in the future if you need long-term care. Many policies will pay about $160 per day for care, including nursing home coverage and day-to-day needs.
Advantages Long-Term Care Insurance
The advantages of long-term care insurance are largely the savings. In the short term, you will spend about $2700 per year on the annual premium. Couples can get a discount of about 30% compared to what they would have paid if they bought it separately. This will then cover you up to $160 per day. The average annual premium for long-term care insurance policies is $2700. Many couples can get discounts, typically 30% off the price of the policies if bought separately. Paying these short-term costs will help you in the long run since nursing homes can cost upwards of $100,000 per year.
Disadvantages of Long-Term Care Insurance
There are a few disadvantages of long-term care insurance. Some of these have to do with the price. While the price can save you money in the long term, it still may not cover everything. For example, the average cost of a semi-private nursing home room was about $250 in 2019. In contrast, long-term care insurance will only pay up to $160 per day for care. This means that you or your loved ones will still have to pay about $100 per day for a nursing home. However, the $160 should still cover the average cost of a daily health assistant, which is $81/day, if you do not need all of the amenities of a nursing home. Additionally, these benefits only last for about 3 years. The average person stays in a nursing home for about 835 days, but many people will require longer care.
Lastly, there is a waiting period of about 3 months after purchasing long-term insurance before the insurance actually kicks in. This means that if you purchase the insurance and suddenly need long-term insurance within 3 months after purchasing, your family will have to pay out-of-pocket during that time.
At Proinsurance Hawaii, we can help you make difficult financial decisions regarding your health and insurance. To learn more, call us today!