As you age and begin developing your estate plan, one major consideration should be the purchase of long term care insurance. It is important to remember that one of the largest costs that will impact you and your family will be the cost of long term care which encompasses home health care, assisted living and nursing home care. The cost of care can range in most urban areas from between $5000 per month to as much as $15,000 per month. For most professionals, your disability insurance dissipates when you become 65. It is wise for people to consider purchasing long term care insurance by the time that they are 50.
By the time that you're in your early 50's to your early 60's, the cost of the long term care insurance is not prohibitive. At the same time, you may find that you have enough cash value in your life insurance policies to pay the premiums internally. By the time that you hit the age of 55 to 60 you may find that it is wiser to use your disability insurance premiums to secure long term care insurance. In this way, you may greatly reduce the strain on your budget by redirecting existing life insurance premium payments to a new long term care insurance policy.
If you elect to purchase a long term care insurance policy, it is important to make certain that it contains all the needed bells and whistles. Most policies require a waiting period before the benefits can be accessed. Given the fact that Medicare and your Medigap insurance policy may cover up to 100 days of a skilled nursing stay, then it makes sense to have a 100 day elimination period before the insurance benefits can be accessed. The current Medicaid look back period is five years. As a result, your policy should cover at least five years. There is a concept called shared care. This type of long term care insurance policy allows either spouse to use the other's long term care insurance coverage. If a couple each has three years of insurance coverage, then either spouse will have the ability to utilize the other's policy benefits giving them six years of total family benefits.
The way that the benefit is configured is based on a daily amount for the cost of care. I typically recommend that you consider somewhere between $150-$300 per day of long term care insurance benefits. If you only use a portion of the daily benefit, it will still be available to the to you or your spouse until all benefits are fully utilized. It is normally recommended that the family access the benefits pursuant to the terms of the policy as soon as possible. In this way you can trigger the 100 day waiting period so that the family can immediately access the remaining benefits that are available under the terms of the policy.
These are just a handful of considerations that a family should consider before purchasing a long term care insurance policy. There are insurance experts who concentrate their business in the area of the sale of long term care insurance. When preparing your estate plan a consultation with a skilled insurance professional is highly recommended.