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What Is Long Term Care Insurance?

Long term care insurance (LTCi) is an insurance product that was developed over 40 years ago when we only had skilled nursing homes for people who needed long term care. Monthly costs back then were probably a couple thousand dollars a month. Today it is around $12,000 a month. These costs can be catastrophic to retirement assets forcing one to apply for Medicaid. LTCi was designed to help people pay for those care costs. Often, these old policies do not cover all the new types of long term care which include: assisted living facilities, Alzheimer’s facilities, adult family homes, and in Washington State, the biggest of all is in-home care.

The cost of the policy will depend on:

    1. Your current age
    2. Your health today
    3. Benefit Period
      • How many dollars a day you want it to pay out.
        • For example, if the long term care costs $300/day, you might decide you want the policy to pay out $200/day and you will pay $100/day out of your own pocket.
      • ┬áThe term -How many years
        • The amount of years once your claim begins that you want to be protected for, i.e., 2, 3, 4, 5 etc.
    4. Elimination Period – How many days you want to pay before the policy starts to pay.
    5. Features available
      • Inflation Protection -The inflation for the $200 a day to grow; 3% and 5% compounded is normal.
        • This protection will allow you to keep up with increases for the cost of your care twenty years down the road when you might file a claim.