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Is Purchasing a Small Long-Term Care Insurance Policy Worth the Investment?

Quick Answer

Not everyone has the budget for complete Long-Term Care Insurance coverage. A smaller policy will help reduce the burden and anxiety placed on your family while providing you with quality care choices. Small plans can still offer many hours of in-home health care and other services every week.
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Detailed Answer

Long-Term Care Insurance is not an 'investment.' It is an insurance policy that will safeguard income and assets from the high costs of long-term health care. 

Even a small policy can offer you access to your choice of quality care services, including care at home, reducing your dependence on family and friends. 

Sometimes a person with a limited budget wants to have something in place to help. Long-Term Care Insurance is custom designed, so you can decide the total amount of benefits you wish to have in place. 

Will an LTC policy with limited benefits be helpful? Absolutely. SmallLong-Term Care Insurance policies can be beneficial, especially with in-home care. Often an individual may only need a few hours of help, especially initially. The policy will provide guaranteed tax-free resources to fund your choice of care services, including in-home care, relieving the burden on your family and your budget.

Example

For example, for an individual receiving thirty hours of in-home care a week, the cost breakdown is as follows: 

According to the LTC NEWS Cost of Care Calculator, the national average cost of in-home care runs about $25 an hour. The cost would run $3000 a month, and a $3000 a month benefit would easily pay for this care easing the stress on your family and your pocketbook. 

What if you only had $2000 a month in LTC Insurance benefits? That would provide you with about 80 hours of in-home care every month. 

Would 80 hours of paid care services help you and your family? The answer is - absolutely yes!

Let's take a $5000 a month assisted living bill. If you live in any type of long-term care facility, you probably will sell your home since you would no longer need it. The expenses of homeownership (taxes, mortgage, upkeep) would all disappear, and your income (pension, social security, earnings off investments) would still be available. 

Using the same example of a $3000 a month LTC Insurance benefit, would a $2000 a month expense be more comfortable to handle than a $5000 a month expense? Again, the answer is yes. 

Some Help is Better Than No Help

The point is simple. Some benefit is better than nothing. You probably don't want to place the future responsibility of caregiving on your family. Caregivers face physical and emotional stress and anxiety.

Plus, policies provide many other resources, in addition to money to pay for your future long-term health care. Most policies offer case management, respite care, additional funds to pay for ramps, chair lifts, braces on your shower, etc. These benefits are usually on top of the money used to pay for care services. 

Short-Term/Limited Duration Plans

One option for smaller benefits is a limited duration or short-term care policy. These plans are often called 'recovery care,' but they usually pay benefits similar to traditional LTC Insurance policies. The policy pays a cash indemnity when you meet the benefit triggers. You get the money to use to pay for the services you need. 

These plans are not available in every state. In the states where they are available, they can be very valuable as an option and are usually very affordable at most ages. Plus, another benefit is they offer broader underwriting. 

With the broader underwriting criteria, those with health problems, who are uninsurable for traditional Long-Term Care Insurance, may have access to this coverage.

Without any Insurance, You're Fully Responsible

When you have no coverage in place, 100% of the responsibility of your future long-term health care is on you and your family. A Long-Term Care Insurance specialist, who works with the major companies, will help you design an appropriate plan based on your budget and other factors. 

Even a smaller plan will help protect savings and reduce the stress and anxiety otherwise placed on those you love.

Even if you want to spend $100 a month (or less), you usually can find some coverage that will reduce the stress on your family. However, the younger you are, the more options are available to you.

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  • Represents all or most of all the leading insurance companies
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