Safeguarding the Caregiver With LTCI

Women have long been known as the caretakers of the family, overseeing the health and welfare of their children and spouses, and for those who are members of the “sandwich generation,” elderly relatives as well. But what happens when the caregiver needs care?

For many families, this creates not only an emotional crisis but a financial one. Medical expenses have led to approximately 50 percent of the bankruptcy filings in the United States, according to Health Affairs Journal. As for long-term care, it’s estimated that 75 percent of people 65 and older will eventually need long-term care, while women face a 50 percent greater likelihood than men of entering a nursing home after age 65.

Combine that with increased overall life expectancy for both sexes and statistics reflecting that women outlive men by five years, and it’s not surprising that long-term care insurance has gained momentum among the Baby Boomer generation, and particularly among female consumers. According to a new study released by the American Association for Long-Term Care Insurance, sales of life insurance policies with long-term care benefits increased 79 percent for the industry’s leading insurance carriers, with women responsible for 60 percent of those purchases.

Long-term care insurance protects against the significant financial risk posed by the potential need for long-term care services, either in a nursing home or at home. It comes into play when, as a result of a chronic illness or disability, a person requires long-term care for an extended period of time. While health insurance or Medicare will cover doctor and hospital bills, depending on the policy chosen, long-term care insurance will pay for a wide range of services and procedures, ranging from skilled and intermediate to custodial. This has become increasingly important as the costs of such care increases, with current figures placing averages for full-time nursing home care at $69,000 to $78,000 per year, while eight hours per day of home health care can cost $43,000 to $70,000 annually.

And it’s not just the elderly who need such coverage. Accidents or a debilitating illness at any age can result in a need for care, with estimates indicating that 40 percent of patients receiving long-term care are under age 65.

For example, one of the realLIFEstories is about Barry Shore, a real-estate executive who, at age 55, was diagnosed with Guillain-Barré syndrome. Fortunately, Shore and his wife had previously purchased both disability and long-term care insurance policies, which together have replaced more than half of his previous income as well as provided funds for in-home care as well as therapies not covered by his medical insurance.

And for those women who are on their own, with no family members available to provide care after a health crisis, long-term care policies offer piece of mind that their needs will be met at the standard of care they desire.

The LIFE Foundation recommends consumers, both men and women, ask several important questions when considering purchasing long-term care insurance.

Where can I get long-term care coverage? More than 100 companies now offer coverage, generally available through groups (typically employers) and to individuals.

What are the types of long-term care policies? Most are “expense incurred” policies (the insured is reimbursed for actual expenses for services received up to a fixed dollar amount per day, week, or month), while some are “indemnity” (paying up to a fixed benefit amount regardless of what the insured spends). “Integrated policies” or policies with “pooled benefits” provide a total dollar amount that may be used for different types of long-term care services. Life insurance policies with long-term care benefits will, under certain circumstances, pay a portion of the life insurance benefit to the policyholder for long-term care services instead of to the beneficiary at the policyholder’s death.

What will the premium cost? This depends on many factors, including the insured’s age, state of residence, the level of benefits, and the length of time until benefits begin. LIFE recommends consulting a representative of a long-term care insurer, an insurance agent, or financial adviser for specific cost and coverage information.

For more information about long-term care policies and AHIP’s downloadable Guide to Long-Term Care Insurance, click here.

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