Long-term Care Insurance

What is Long-term Care Insurance?

Long-term Care Insurance covers specific costs of custodial care in a nursing facility or at home.

Long-term Care Insurance Defined

Long-term care insurance is a type of insurance designed to cover the costs associated with long-term care services for individuals who have difficulty performing basic activities of daily living (ADLs) or require supervision due to severe cognitive impairment.

How Long-term Care Insurance Works

Long-term care insurance covers the expenses of long-term care services, including assistance with activities such as bathing, dressing, eating, and medication management. It aims to protect financially against the high costs of long-term care, which can quickly deplete savings and assets.

Coverage: Long-term care insurance typically covers services provided in various settings, including nursing homes, assisted living facilities, adult day care centers, and at home. Covered services may include assistance with ADLs, skilled nursing care, rehabilitation services, and custodial care. Policies may vary regarding coverage limits, benefit periods, and elimination periods (waiting periods before benefits are paid).

How to Get Long-Term Care Insurance

Long-term care insurance can be obtained through insurance companies that offer such policies. When purchasing long-term care insurance, individuals should consider factors such as their age, health status, desired coverage options, and budget. Premiums are based on these factors, with younger, healthier individuals typically paying lower premiums.

Some employers also offer long-term care insurance as an employee benefit.

Long-term Care Insurance Example

Sarah, aged 60, purchased a long-term care insurance policy to prepare for potential future long-term care needs.

Several years later, Sarah is diagnosed with Alzheimer’s disease and requires assistance with daily activities such as bathing, dressing, and meal preparation. Since her long-term care insurance covers home care services, Sarah can hire caregivers to assist her at home. The policy pays for the cost of the caregivers, allowing Sarah to receive the necessary care while preserving her savings and assets for other expenses.

In summary, long-term care insurance is designed to cover the costs of long-term care services for individuals who need assistance with ADLs or supervision due to cognitive impairment. It covers various care settings and services and can be obtained through insurance companies. Purchasing long-term care insurance helps individuals plan for potential long-term care needs and protects their financial security.