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Thinking about Long Term Care Insurance - Here are my 2 Non-Negotiables

Darryl Rosen • Dec 17, 2022

There are other factors, but these two stand out!

If you read my posts or watch my videos from time to time, you may know that I am a big proponent of Long Term Care insurance. The reason is due in part to my Father having dementia and his policy being extraordinarily helpful for our family.

So I not only suggest long term care for my clients but I also own a policy myself (Jill and I) and feel grateful that my Father bought his policy long ago.

If you ever find yourself in the long term care insurance market, here are my two non-negotiables for finding the right policy.
  • Chose an indemnity policy versus a reimbursement policy
Both types of policies begin paying when you can’t perform 2 of the 6 ADLs (activities of daily living) or have a cognitive condition.

With a reimbursement policy, the insured (or his or her caregivers) must submit invoices every month. This is how my Father’s policy works. Thankfully, his care agency handles this but for many it can be a giant pain. 

I don’t want Jill or the boys worrying about this kind of stuff!

With an indemnity policy, once you qualify they just send you the money. You can use the money for whatever you choose. With reimbursement policies, there are expenses that are prohibited (or less likely to be approved). For example, with an indemnity policy I could pay my son to help me get dressed. KIDDING, I would never pay my son for that; however, I could if I wanted…

Seeing the use of long term care up close as I am right now, I just prefer the flexibility. 
  • I prefer policies with inflation protection
And when I say “I prefer” what I really mean is that I’d be hard pressed to get behind a policy that didn’t have inflation protection. Here’s the tradeoff: When you select this protection (3% simple, or even 5% compound, etc.), there will be less benefit if a long term care event happens earlier in life. With inflation protection, there will be more overall funds available should help be needed later in life - when it typically happens.

I run a lot of illustrations and if I am to suggest this for a family, there must be a substantial bucket of money available for care later in life.

This may mean investing more money than they had planned and for some this just doesn’t make sense. The younger you are the better. This is where you can get the best bang for your buck.

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