What you need to know about long-term care insurance
People are living longer and longer these days, and it's likely that the majority of retirees will need some type of professional care toward the end of their lives. This care is expensive, and most retirees won't have enough savings to pay for it. That's where long-term care insurance can play a role.
What is it?
Long-term care insurance is a type of insurance that helps pay for long-term care, which can include in-home care or care in a nursing home. It is a type of supplemental insurance that some companies offer as part of a supplemental employee benefits package.
Who is it for?
Long term insurance is a good idea to anyone, but it is especially important for people who aren't wealthy and for those who won't have a family to help take care of them in their retirement years.
How does it work?
Most long-term policies pay a set daily or monthly amount for care that is covered in the policy. That might be care provided in a nursing home setting or care provided at home by a nurse or home health aide. Some policies also pay for modifications you need to make to your home to continue living there, such as adding a ramp or rails in your bath and shower.
Types of coverage
Long term insurance usually comes in two main types: standalone care insurance and care insurance that is a rider or add-on to an insurance policy. Standalone policies work just like most other insurance policies in that you are paying premiums to have an insurance company pay for the care you need in retirement. Long-term care benefits that are riders to life insurance policies can work in a couple of different ways. They may provide extra long-term benefits in addition to your death benefit, or they may provide what is called a "living benefit," which allows you to spend down your death benefit to pay for long-term care
The major benefit of a long-term care policy is that you ensure you are able to pay for long-term care without having to deplete your retirement assets