Long-term care insurance is designed to pay for the cost of helping you with daily tasks should you become unable to take care of yourself. It can typically be used for in-home care or to help pay assisted living and nursing home costs. The cost of long-term care insurance varies widely. Things that affect your premium are your age, current health condition, prior health history, desired benefit, and optional riders you may choose.
Younger Applicants Pay Lower Premiums
The younger you are when you purchase your long-term care insurance policy, the lower your premium will be. Guide to Long Term Care.com demonstrates this through a sample premium. A 40-year-old person applying for the same coverage as a 65-year-old will pay less than half the premium on average. It is more likely that the 65-year-old will require care before the 40-year-old will. As a result, your premium will be more expensive as you age.
Elimination Periods and Benefit Periods
The elimination period on a long-term care insurance policy is the time frame during which you will pay the full cost of your care. The elimination period may also be referred to as the "deductible." A longer elimination period will result in a lower premium. The benefit period is the amount of time that the long-term care policy will pay for care. Companies offer a range of time that they are willing to cover; you can typically choose coverage for one, three or five years, or select lifetime coverage. Since lifetime coverage will pay for your care as long as it is needed, it will cost the most. The federal government has tables that illustrate how different benefits affect premium cost at www.longtermcare.gov.
Inflation Protection Riders
One rider that is worth considering is an inflation rider. According to Genworth Financial's Future Cost Comparison, annual care costs in Chicago, Ill., which are $50,000 in 2011 could be as much as $133,000 in 20 years. While a $150 daily benefit may seem adequate for now, it won't go that far in the future. Choosing either a simple or compound inflation rider means that your benefit will increase over time, hopefully keeping up with inflation. Keep in mind that a compound inflation rider will increase your benefit more than a simple inflation rider, but it may cost more.
Shopping for the Best Rate
Working with a qualified and independent long-term care insurance agent can help you find the best coverage for the lowest cost. It's important to work with an independent agent who looks at multiple companies on your behalf. Health conditions like hypertension or diabetes are treated differently by carriers who offer long-term care insurance. An independent agent can help you find a carrier that will provide the most favorable underwriting for your current health issues.
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