One of our clients was questioning whether they should keep their Long Term Care insurance policy due to a huge rate increase. They wondered if they should just drop the coverage altogether. Here’s what they decided to do…
This may be a question you find yourself asking as you approach retirement.
And with so many insurance options, it’s hard to know what is best for you. So, we brought back our Long-Term Care Insurance specialist to answer a few more questions on the topic.
Q: Long-Term Care Insurance is now available online. Why should someone use an agent when the policies are available online?
A: The expertise of an agent can be invaluable. First, you always want to buy from an independent agent. They will let you review policies from different companies. If you’re buying from a captive agent, they are working for one company. This means they have to believe the one product is the best. It may be the best for the agent but it may not be the best one for you. An independent agent will let you compare multiple rates and policies from many companies.
Buying over the Internet isn’t effective because choosing the right policy isn’t easy. You have to consider more than just the cost of the premium, but options such as whether to use a “return of premium” plan that will return your entire premium if you do not use them.
Q: How do I find a reputable agent?
A: References. References. References. You want to find someone who specializes in long-term care insurance, due to its complexity. Talk to friends, neighbors, relatives and financial advisors for their recommendations.
When you start talking with agents—and, again, we recommend independent agents—ask them about their experience, how they work, what fees they charge, the process and ask them for references. There’s no reason why they shouldn’t provide you with names of satisfied clients. Don’t be bullied into making a quick decision by an aggressive agent.
Q: When should I buy long-term care insurance?
A: The ideal age at which to buy coverage is when you’re in your 50’s, when the rates are quite reasonable.
Q: Do the premiums spike when somebody turns sixty-five?
A: Generally the premiums do rise substantially at age sixty-five. The hikes may begin at eight or ten percent but we’ve seen them up as much as 30%.
If you missed Part One of this discussion, check it out here.
For more information on what you should be considering when planning your incredible retirement, request your free copy of Brian Fricke’s book Worry Free Retirement.
Recently one of our clients asked us if they should enroll in Medicare even though they were still working. To be honest, we almost gave them some poor advice. Here’s what happened…
Do you really need long-term care insurance?
This may be a question you find yourself asking as you approach retirement. And with so many insurance options, it’s hard to know what is best for you.
So, we talked with the Long-Term Care Insurance specialist we recommend to all of our clients. I believe his advice will help you make more informed decisions about long-term care insurance now and in the future.
Q: What are some of the statistics on long-term care insurance?
A. Well, for starters, one of every two people is going to need care in their lifetime. That’s a 50/50 chance of needing insurance. If you’re going to buy one type of insurance, long-term care insurance is the type to buy.
On the other hand, there’s a one in 1,200 chance your house is going to burn down. That means you’re paying a premium for coverage on an event that is far less likely to occur. It’s a better deal for the insurance company.
You do need auto insurance because, there’s a one in 240 chance that you’re going to get into an accident. But listen to these remarkable statistics:
There’s a one in twenty chance that you’ll spend more than three days in a hospital as you age. There’s a one out of two chance that you’ll need long-term care at some point.
Q: Are there people who don’t need long-term care insurance?
A: Yes, it isn’t for everybody.
For example, if you don’t have many assets and little to protect, the premiums may be a hardship. You could probably spend your savings if you needed care and then get help from Medicaid.
Long-term care insurance is useful for many, but not all people.
Q: How much insurance do you really need?
A: It’s hard to give one broad answer. You want to have enough, but not too much insurance. We show people the risks and then help them determine how much risk they want to take.
For example, if care is $150 a day in a nursing home, someone might want to buy a policy that pays a part of that, say $100 or $120 a day. They will take the risk of paying the rest of that bill.
Other people don’t want to take on any risk and want the insurance company to pay everything. They’re usually the people who choose low deductibles on their car, home and medical insurance.
These people should look for a policy that pays everything or even pays a little bit more than everything to make sure they’re fully covered.
Stay tuned for Part Two of our discussion on Long Term Care insurance.
For more information on what you should be considering when planning for your incredible retirement, pick up a copy of my book, Worry Free Retirement.