How Can You Afford Long-Term Care Insurance?
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How Can You Afford Long-Term Care Insurance?
Although the policy premium for a long-term care insurance contract is not supposed to increase, the insurance company has the right to increase rates on a whole group of policies at once. But most companies have never raised rates on policies in force. The industry has taken steps to ensure proper pricing on new policies to avoid surprises later. That is another reason premiums are not cheap.
Things To Know
- How much you can afford for long-term care (LTC) insurance should be part of your financial planning.
- Start by doing a forecast of your income, expenses, and net worth.
Factor long-term care costs into your finances
How much you can afford for long-term care (LTC) insurance should be part of your financial planning. There are so many factors involved in premium-setting that most people will need personalized premium quotes to decide which policies and policy benefits are best suited to their needs.
Where to start
Get started by preparing a lifetime forecast of income, expenses, and accumulated net worth to help estimate how much you are likely to have available for long-term care needs. Use your family history, current health, knowledge of advances in medical science, and healthcare costs to estimate how much money you might need for long-term care costs and when you are likely to need it. Now determine how much benefit you will need from a long-term care insurance policy to make up the difference between what you estimate you will have available for long-term care and what you will need. A financial planner or long-term care insurance specialist will be happy to help you with this process.
When you have estimated how much you will need in the future, you can build a policy designed to meet your needs. Once you have decided you are going to buy a long-term care insurance policy, it is important that you be able to maintain the premium payments as long as you need the insurance. If your ability to make premium payments is in doubt, an LTC policy is probably not for you. Today’s premium dollars would be better invested elsewhere—building an emergency fund, for example.