Long-Term Care Insurance Is Expensive: We Know How to Help You Save

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Depending on how long you live, you may need some form of long-term care. An estimated 70% of those who live to age 65 will need assistance as they age. That could mean living in a nursing home, hiring home health aides and everything in between. Long-term care insurance can be a way to offset the costs, but even that can get pricey. We’ve put together what you need to know when it comes to saving on long-term care insurance.

What Is Long-Term Care Insurance?

Long-term care isn’t cheap. One study from Genworth put the cost of a semi-private room in a nursing home at $8,669 a month. Make that a private room, and you’ll pay $9,733 a month.

A long-term care insurance policy takes care of some of that cost. As with other kinds of insurance, you’ll pay premiums in exchange for peace of mind. But many long-term care insurance policies put restrictions on when and how you’ll be covered. You’ll also likely have a limit on the length of time the policy will pay out.

These restrictions mean long-term care insurance isn’t always the best option. Daniel J. Adams, MBA, CFP® and CLU®, is an expert contributor and reviewer for Annuity.org. He said your unique financial situation is an important factor in deciding whether or not long-term care insurance is the right product for you.

“Unless you already have significant liquid assets that you don’t mind spending if the need arises, it is typically best to look at purchasing some kind of long-term care insurance policy as part of a comprehensive retirement plan,” Adams said.

Four Tips for Saving on Long-Term Care Insurance

One frequent complaint about long-term care insurance is that premiums keep rising. For someone on a budget, that can be costly. But don’t cancel your policy just yet.

“Too many people drop their long-term care insurance policies because they are upset by a 20% premium increase,” said Tom West, signature estate and investment advisor at Lifecare Affordability Plan. “After paying premiums for 20 or even 30 years, it’s hard to swallow increases, but the alternative of self-paying for assisted living or nursing home care can be even more costly.”

Instead, you can tweak the policy. Here are a few tips for saving on long-term care insurance.

1. Start Early

The younger you can purchase long-term care insurance, the better. However, Scott Maibor of Senior Benefits Boston, cautions against overbuying coverage.

“If you purchase when you are younger, starting with a smaller benefit with guaranteed annual cost of living adjustments will make the policy more affordable,” he said. “Keep in mind other income streams from pensions, Social Security, etc. The policy benefits do not need to cover 100% of the cost.”

2. Take Advantage of Discounts

Whether you’re lining up a new policy or trying to save money on an existing one, it’s important not to miss any discounts. Long-term care insurance providers may reduce your rate if you’re in good health, you’re married or you have other insurance products with that carrier.

“Another easy tip to reduce premium rate is to share a policy with your partner,” adds Lori Wray, with Matrix Insurance.

3. Participate in a Group Policy

Some employers offer long-term care insurance as a benefit. If that isn’t an option, check into taking out a policy through an organization. Make sure to compare the cost of any group policy to one you can source on your own. Not all group plans are cheaper than those purchased individually.

 4. Tweak Your Coverage

One of the easiest ways to start saving on long-term care insurance is to adjust your coverage. As with any policy, the bigger the potential payout, the higher your premiums will be.

“Review your policy to see if there are any unnecessary benefits you can reduce or eliminate,” said Beth Tofel, president at FootprintID. “Some insurers offer options to lower premiums by adjusting the benefit period or daily benefit amount.”

Three Alternatives to Long-Term Care Insurance

Maybe you’re one of many people who don’t have a long-term care insurance plan in place. But insurance is only one option. Here are a few alternatives to consider.

1. Investing

Long-term care insurance isn’t an investment. You’re taking out a policy to protect your assets if you do eventually need health care assistance. But you can take the money you’d put into premiums and invest it. Whether it’s a low-risk investment like a certificate of deposit or you put the money into real estate or the stock market, you can accrue interest on each dollar you set aside.

2. Self-Insuring

When it comes to long-term care insurance, you’re playing the odds. Yes, there’s a chance you’ll never need long-term care. However, if you do need it, you might regret not having coverage. As Wray explains, long-term care insurance is a wise investment when you have a high risk of developing a serious illness and you want to protect your assets. But there are some scenarios when it isn’t worth the premiums you’ll pay.

Wray suggests you skip long-term care insurance when you have limited assets or income and may qualify for Medicaid. She also said if you have enough savings or other investments to cover your long-term care, you can consider skipping insurance.

3. Life Insurance with Care Benefits

Patrick Simasko, elder law attorney and financial advisor at Simasko Law in Mount Clemens, Michigan, has another long-term care savings option. He said there are two types of long-term care insurance. One is where you pay premiums for a traditional policy that will help pay for your care for a designated time frame. But the other type of policy is a decent option.

“The other policy is new to the market, and it’s a life insurance policy,” Simasko explains. “I like these more because you pay a certain amount over a period of time, and it gives you a death benefit. If you die, the family gets the benefit. However, if you meet a less restrictive set of criteria, you can use the death benefit for your care. Whatever is left over goes to your family.”

Saving on long-term care insurance can vary from person to person. It’s important to take a look at your own finances, as well as your own health and family medical history, and make the choice that’s best for you.

Stephanie Faris is a professional finance writer with more than a decade of experience. Her work has been featured on a variety of top finance sites, including Money Under 30, GoBankingRates, Retirable, Sapling and Sifter.