No one wants to think about getting old and needing assistance. However, it is important, so one part of estate planning is outlining how you are going to pay for long-term care.
According to Compass by WebMD, an average of 70% of individuals 65 years of age or older will require long-term care services at some point, and this can cost an average of $50,000 to over $100,000 per year. Long-term care insurance is one option to help cover costs, and it helps to know what the pros and cons are.
Ability to afford various types of care
Long-term care insurance helps protect other assets, such as cash or your home equity, which is a benefit for many people. This type of insurance also covers a variety of services in the event you have a disability or chronic illness. The insurance helps cover assisted living centers and nursing homes, but it also covers:
- Nursing care at adult day care centers
- In-home nursing care
- Hospice care
- Respite care
Because it covers in-home help, it helps you maintain independence, as there is not a requirement to move into a nursing home.
To help reduce dependence on Medicaid to pay for long-term care, the federal government gives individuals a tax break for purchasing long-term care insurance. As a result, the premiums are tax deductible.
AARP discusses that one of the disadvantages of this type of insurance is cost. To keep it more affordable, it is smart to begin looking at policies earlier in age, as once you hit 65, the premiums increase quite dramatically.
Must meet qualifications
To be eligible for long-term care insurance, you must meet certain qualifications. If you have a pre-existing condition, there is a good chance you will not qualify for coverage.
May not need it
As with all types of insurance, one con is that you could pay premiums for years but never need to take advantage of the coverage. If you are healthy and have a good medical history, there may be smarter ways to plan for long-term care.