Retirement News : Seniors : WHAT IS LONG-TERM CARE INSURANCE?

WHAT IS LONG-TERM CARE INSURANCE?

Date Added: 26-04-2005

Long-term care insurance is coverage for extended periods in which a person needs assistance to do basic activities, such as bathing, dressing and eating. Generally it is used by the old and frail to cover the cost of in-home health care, a nursing home or an assisted living facility. It is not health insurance for medical costs.

Long-term care insurance policies are sold by agents or insurance brokers. Generally, they pay a daily dollar amount of benefits, after a certain waiting period. Many policies add inflation protection to that dollar amount.

The policies come in several forms. Most older policies simply require that you keep paying the premiums to keep them in force. The premiums can increase as the policyholder ages. Some policies allow the insured to pay premiums for a set period and then the policy is considered paid in full.

Who needs them? Insurers often estimate that 40 to 60 percent of all people will need this sort of care at some point in their lives. It can be quite expensive. Consumer Reports said a 2003 survey by MetLife pegged average nursing home rates at $180 a day or $66,000 a year and average in-home care rates at that time were $144 a day.

People tend to buy these policies at age 65, although many people now are starting to purchase them in their mid-50s.

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