Long-Term Care Insurance

One out of three individuals who reach the age of 65 will spend at least three months in a nursing home and one out of four will spend a year or longer. Because of longer life expectancies and because the cost of long-term care now averages over $3,500 a month, more people are taking a serious look at purchasing long-term care insurance.

Before shopping for a long-term care policy, do some homework. Make sure you understand just how these policies work so that you can purchase the right policy for your needs and resources. Then as you compare policies, look at these five specific things:

1. First, the length of the elimination period. This is how long the insured individual must be in the nursing home before the insurance actually starts paying. Think of it as the deductible on this policy. The longer the elimination period, the less expensive the premium.
2. Next, look at the length of the benefit period. Two to three years of benefits is normal. The longer the benefit period, the more expensive the premium.
3. Then make sure your policy specifically covers Alzheimer’s disease. Some policies actually specifically exclude care for Alzheimer’s patients.
4. Now make sure the policy is guaranteed renewable. With guaranteed renewability, your policy cannot be cancelled unless you stop paying the premiums or your benefits have been used up.
5. And finally check for an inflation rider. You want to be sure your policy will keep up with rising costs of long-term care.

Carole Bozworth, BozworthC@missouri.edu
Regional Specialist, Consumer and Family Economics
Jackson County, MO
University of Missouri Extension