If you are nearing retirement and are very keen on making sure that you are covered in terms of care in those years, then it will be a smart move to explore the different options you have when it comes to elder care insurance.
Different kinds of coverage are now being offered when it comes to this insurance policy. To help you decide on how to go on planning about long term care, here are the choices from which you can choose:
- Long term care insurance – A traditional long term care policy entails that you pay your premiums for a certain number of years and once you triggered your benefits, the company will then pay off your claims. Typically, a conventional elder care insurance such as this covers for the assistance you need in performing the Activities of Daily Life (ADL) such as eating, dressing and going to the bathroom. This can either be administered inside the home, assisted living facility or nursing home. If in any case that you intend to stop on paying your premiums, you could lose the rest of the money you have already invested. That could be a downside. That’s why it is best to shop around for rates and sign up for the policy that best suits your financial capability in order to avoid this predicament in the future.
- Hybrid products – A hybrid product that can suit seniors is a fixed annuity that has the benefits of long term care. An annuity is a long-term plan that allows you to sock away funds that will be later paid to you. This is a strategy to ensure that you have a steady cash flow even during retirement. Presently, you can opt for a fixed annuity and has the option to include long term care benefits in it. How? By paying a rider fee that ranges from 1.5-3% annually. This can help you accumulate funds that you can use for long-term care on top of your actual annuity. However, this can have a negative effect on your annuity’s interest income as the rider fee can eat into that rate and can affect the growth of your money as you keep it locked in.
- Shared care policy – If you are married, you and your spouse can combine your individual policy and share the benefit duration as a whole. Say, both of you owns a 5-year policy, that will amount to 10 years worth of coverage that can be pooled together for you. If your partner used up 4 years off that coverage, then you have 6 years left for you. For the elderly, going for this can be a strategy to cut down on long term care premiums.
- Long term care partnership programs – If your long term care policy is approved by the state, then you can be viable for Medicaid without giving up your assets. Normally, you need to have a limited amount of assets before you can qualify for this federal program. On the other hand, partnership programs allow you to keep your assets should the time come that you wish to apply for Medicaid. Most seniors’ income become relatively small during retirement, thus this program can work greatly to their advantage, as they need not exhaust their assets just so they could be given Medicaid benefits. Partnership programs like this are available in about 40 states.
So which type of elder care insurance is best? It actually depends on your needs and financial strength. However, this is what Jesse Slome, the executive director of the American Association for Long-Term Care Insurance, advises, “If your need for long-term care is relatively short, meaning a year or two, consider a hybrid life product. But if your need is likely to be longer, you’re going to blow through the policy and be back on your own savings.” Simply put, going for a traditional long term care policy can still be the best track for you to take.