Early financial planning can go a long way in getting your loved ones the care they’ll need later in life.
Life planning is easy to overlook when your parents’ health is optimal, and you believe you have plenty of time before you need to get serious about their senior years.
But ask anyone who has a family member who needs long-term care, and they’ll often say they wish they could go back and prepare for the future.
More than 8.3 million elderly individuals need long-term care each year, with the overwhelming majority receiving home care services. However, Medicare supplements and employer-sponsored health insurance often don’t cover the costs.
That’s where long-term care insurance can fill in the gaps and simplify future planning.
What Is Long-Term Care Insurance?
By definition, long-term care insurance provides daily coverage up to a specific dollar amount to those who need help with daily living over the long term. In-home services, nursing homes, adult day care centers, and hospice care are all reimbursable with long-term care insurance.
Beneficiaries are typically eligible for reimbursement when they cannot perform at least two of the six main daily living activities: dressing, bathing, eating, toileting, bladder and bowel control, and getting into or out of a bed or chair.
Long-term care is an essential part of preparing for the future. Without it, the responsibility to provide or pay for care falls on your family, who may be unable to afford it.
When to Purchase Long-Term Care Insurance
Financial planning is much like the old Chinese proverb about planting a tree: the best time to plant was about 20 years ago; the second-best time is now.
Many people who buy long-term care insurance do so at an early age, thinking they’ll save money because the premiums are cheaper. They also fear that the longer they wait, the greater the chance of getting a health condition that could prevent them from qualifying for long-term care.
However, waiting until you or your parents are 60 or older before purchasing a policy can save you money. The premium will be higher, but you could invest the money you would have spent if you had bought a policy earlier and add a cushion to your finances.
There is no perfect age or formula for long-term care. Consider your family health history, your personal finances, and how much your peace of mind is worth—that alone is more valuable than any amount you’ll save on premiums.
Your Elderly Loved One May Already Have a Long-Term Care Policy
Taking over elderly finances can be a challenge, especially if their most important papers and bills aren’t kept together. But if you can find their insurance information, past and present, then you may learn they had the forethought to purchase a long-term care policy.
Even a small amount of coverage can help to ease the financial expense of in-home care and provide you and your family with respite.
If your loved one doesn’t have a policy, use this opportunity to explore financial planning options for yourself. One day, your loved ones may be glad you prioritized your future when you had the chance.