Who should buy long-term care insurance?

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OKLAHOMA CITY - National statistics show that about 70 percent of Americans will need some kind of long-term care at some point.

Long-term care, which encompasses in-home care, assisted living facilities and nursing home care, is very expensive. Many of the programs are not covered by Medicare or private health insurance.

In fact, the average cost for nursing home care in Oklahoma is around $57,000 a year. Assisted living averages $37,000 a year.

However, long-term care insurance is expensive too. Depending on your age, health and provisions of the policy, premium costs can range from $1,000 to $5,000 a year for an individual policy.

According to a recent study, most Americans don't need to purchase a policy. In fact, experts recommend that only 19 percent of men and 31 percent of women should actually get one.

Seniors with limited financial resources but need long-term care usually turn to Medicaid to pick up the tab.

So who should consider buying a policy?

Long-term care insurance policies make the most sense for people who can afford the monthly premiums, and who have assets of at least $150,000 they want to protect, not counting their homes and vehicles.

Also, if your family has a history of Alzheimer's, dementia or stroke, you may consider a policy.

Gender is also a factor since women tend to live an average of five years longer than men.

If you decide to purchase a policy, do your homework to find cost-cutting strategies.

Buy young: The most basic way to get long-term care insurance at a cheaper rate is by purchasing it at a younger age. For example, a typical policy that costs a 55-year-old $1,500 a year in premiums could costs a 65-year-old $3,000. Health is another fact that can affect costs. While good health can lower your monthly payments, having a preexisting medical condition can increase your costs, or you may not be able to get insurance at all.

Sign up as a pair:  Many insurers offer 20 to 30 percent discounts on premiums if you sign-up at the same time as your spouse, partner or sibling.

Choose a shorter benefit period: Most people need long-term care for just under three years on average. So, by choosing a policy that covers you for two or three years, versus five or more years, it can cut your premiums by 20 to 40 percent.

Lengthen the time you pay: Most policies have 30 to 90 day waiting periods that require you to pay out-of-pocket for care before the policy kicks in. By choosing a longer wait period, it can lower your premiums 15 to 20 percent.

Lower the daily benefit: You can get a policy that pays out $100, $150, $200 per day or more, but the higher the benefit, the higher your premium. So consider a plan that covers two-thirds the daily cost, and pay the other third out of savings. That could cut your premiums by about one-third.

Buy lower inflation protection: Inflation-coverage protects you from the rising costs of care. Five percent compounded annually has been a common practice in the industry but it’s expensive. Consider a policy that has a 3 percent CPI-adjusted inflation protection. This can save you 50 percent or more.

Get state help: Oklahoma offers a long-term care partnership program that can help you save too. Under this program, if you buy a long-term care policy approved by your state Medicaid agency, you can protect an amount of assets from Medicaid equal to the benefits that your policy pays out. With this program, you can choose a shorter benefit period, which will lower your premiums. See okltcpartnership.org to learn more.

Buy a combo policy: If the thought of paying expensive monthly premiums for long-term care insurance – which you may never use – is keeping you from buying a policy, consider one that combines long-term care and life insurance. These policies provide a death benefit for your heirs and a pool of money you can use for long-term care. Any funds you use for care are generally subtracted from the death benefit.

To help you find a policy, visit the American Association for Long-Term Care Insurers.

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