Q. Do you have any tips for buying long-term care insurance?
A. These policies vary widely in terms of cost, what they cover, and when they will actually pay. This makes it very tough to compare them. Your best bet is to learn more about them and then get quotes on policies that offer exactly what you want.
With long-term care insurance, it's good to start early. If you wait until you're 75, the cost will be fairly steep. Many policies allow you to buy in your 50s and enjoy a fixed premium for the rest of your life. This can be a good deal. It's also smart, because you can suffer ill health at any time and, once you do, you may have trouble getting long-term care insurance. Better to sign up while you're still healthy, if possible.
Another strategy is for a couple to shop for coverage together. Some companies will offer a substantial discount if you're buying two policies together.
If at all possible, get a policy that increases the amount of your benefit to keep pace with inflation. This is especially important if you're buying the insurance relatively early in life. You may not need it for 20 or 25 years. But, when you need it, you don't want it to have become a pittance.
As with disability insurance, you can decrease your cost if you're willing to accept a lengthened waiting period between when the need occurs and when the benefits kick in. You might also limit the policy's payments to include only part of a nursing home's costs, planning to make up the difference with Social Security or some other income or savings.
Other features to look for in a policy:
- No prior hospitalization is required. (Some policies require this before paying for nursing home expenses.)
- Home health care is covered (in case you don't want to and don't need to go to a nursing home).
- You're covered no matter what kind of nursing home you choose.
- The policy doesn't limit its coverage to just "skilled care." This is required by a tiny fraction of long-term care patients and is one way insurers can try to dodge payments -- by severely limiting what they'll pay for.
Learn more about insurance in our Insurance Center. You may not have thought about some kinds of insurance, such as disability insurance, but they're vital for many people. Take a little time to learn more and you may be very happy you did, if some calamity occurs in the future. Additional insurance information can be found at InsBuyer.com and Yahoo!
If you have any questions, thoughts or opinions on this column, share them with others on our Ask the Fool discussion board.
This question and answer is adapted from The Motley Fool Money Guide: Answers to Your Questions About Saving, Spending and Investing. For answers to this and 499 other common money questions, check it out -- it's a handy resource.
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