Purchasing long-term care insurance is a personal decision, but you are more likely than not to need it. Below our financial planners in New Jersey share the pros and cons to having an LTC insurance policy.
What is Long-Term Care Insurance?
Long-term care insurance covers long-term support services such as assisted living, adult daycare, respite care, hospice care, memory care, etc. These insurance policies reimburse you for long-term care costs, up to a predetermined limit. This way, you can get the quality services you need when you need them.
Long-term care insurance is a great option for many people. But with high premiums, strict requirements and some limitations, an LTC policy may not make sense for everyone.
Pros of Long-Term Care Insurance
Here are the advantages of taking out an LTC policy:
- Peace of mind. LTC insurance lets you seek the care you need without having to rely on family, giving you the ultimate peace of mind.
- You’re likely to need it. The American Association for Long Term Care Insurance (AALTCI) says that 68% of people who are 65 and older will need long-term care.
- Have options. If you do need assisted living one day, long-term care insurance gives you options. You can choose a high-quality facility and maintain your financial independence.
- Tax free benefits. LTC insurance benefits are tax free. The monthly premiums are also tax deductible.
Cons of Long-Term Care Insurance
Some things to keep in mind about LTC are:
- Expensive. Long-term care insurance is not cheap, and because it’s relatively new, pricing is a major concern. As your health changes, premiums may increase.
- You may not qualify. Between 15% and 20% of applicants are denied coverage. Some health concerns may also make your premiums higher.
- You may not need it. It’s possible that you may not ever need long-term care. As an alternative, the insurance industry is introducing hybrid plans that combine LTC insurance and whole life insurance in NJ.
If you are considering long-term care insurance, schedule a consultation with Leonard Financial Solutions. Our financial advisors in NJ can help determine if this insurance is right for you based on your financial health. If we find that LTC is not the best option, we can suggest other solutions for long-term care planning.