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Long Term Care Insurance

Many people become sick or infirm in their later years. The high cost of nursing home care can quickly deplete most or all of their life savings since Medicare and most other health insurance plans are designed to cover only short term medical needs. Medicaid (federal insurance for the poor) may help, but generally only after you've reduced your life time savings to near zero.

Long term care insurance is designed to provide coverage for many long term care costs to enable you to get the care you need without endangering your savings. Here are some points to consider when shopping for long term care insurance:

  • Consider what your income and assets will be at the point you might need care. This will help you purchase the right amount of insurance without requiring you to drastically change your lifestyle or financial picture either now or then. For example, consider what deductible you can afford (this is referred to as the elimination period). The more days you stay in a nursing home before benefits start, the less expensive the policy will be.
  • Look for automatic compounded inflation protection. A policy that pays out $200/day in 2005 dollars will not be worth very much in another 25 years if the benefits are not also pegged to inflation and costs continue to soar.
  • Payment triggers (things that cause the insurance to start paying out) and their associated benefits should be easy to understand and not overly restrictive.
  • Home care is an important benefit that allows you to recuperate at home while still receiving benefits to cover in-home care.

Be sure to shop around. Compare premiums,

benefits, deductibles, and co-payments. In spite of state regulations, each company sets its own rates based on competitive forces. And remember that the single most important factor affecting the cost of long term care insurance is age, not health history.

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