Planning Ahead for Long Term Care Insurance Costs

The expense of insurance can be overwhelming for those who have not planned properly; starting early can help minimize the long term care insurance costs. As there are five types of long term insurance, choosing the type of care you want early can protect you from not having much of a choice down the road. By planning and selecting the type of insurance you receive, as well as when and where you receive it can help minimize your costs and maximize your benefits.

Consider: Partner Discounts

You may not be able to state with complete certainty whether or not your spouse or life partner will be around when you need long term care, especially if you are planning ahead significantly. But if you're married or in a long term relationship, it's worth considering partner discounts when you try to minimize long term care insurance costs. Many companies will offer a discount for partners and if one person needs more than their own benefit period, they can use some of their partner's benefit period.

Consider: Money Pool

With long term care insurance, you pay for a specific amount of money that you can draw from; your benefit term and your daily benefit amount will determine your money pool. Ideally, plan for an estimated amount you would need per day and the length of time you'd like to have access to the money. For example, a person could have a $250 daily benefit and a 6 year benefit period - this would mean they have access to $547,500. If when drawing on the insurance you use less than the daily benefit, the benefit period can be extended. Be aware, when you price long term care insurance costs, that where you live can greatly affect the rates available.

Consider: Inflation Protection

As long term care insurance costs continue to increase, inflation can be a real problem. Depending on the policy, you may have the options of no inflation protection, simple inflation protection, and compound inflation protection. Unless an individual is already a senior citizen, compound inflation protection is usually best since you may not use your benefits for 15, 20, or 30 years down the road. The compounded interest will help offset the increasing costs for your care.

Consider: Type of Coverage

Another decision you'll face is whether you want facility only or comprehensive coverage. Predictably, a facility only policy will cover those services performed while you live in a nursing or assisted living facility or hospice center. Comprehensive coverage will provide for services you receive in a facility as well as those in adult day care and home health care services. For many individuals, comprehensive coverage is a better choice as it allows more freedom. It is usually less expensive to get facility only coverage if you know you'll be in a facility. Some people determine their likelihood of facility living based on factors such as family support, other illness or disabilities, and so on.

Planning for long term care early in life does mean that you are making decisions and estimates with limited information that may change before you have to use your benefits. That said, starting early and having to reevaluate later is a much better plan than simply waiting too long. Earlier planning will help you minimize your long term care insurance costs.