Does Long Term Care Insurance Protect Personal Assets?
If you have a solid financial portfolio that you want to preserve, your first question about long term care insurance should be “Does long term care insurance protect personal assets?”
Such a question is extremely valid and its answer will often play a major role in your decision of whether or not to purchase this type of coverage.
The Purpose Of Long Term
Care Insurance
Long term care insurance was specifically designed to help protect personal assets, so that as you age and need long term care, you won’t need to exhaust your own financial assets to pay for such care.
This allows you to leave more of the assets you have worked so hard to accumulate to your spouse, children and whomever you choose, rather than paying it out piece by piece to a nursing home or assisted living facility.
Long Term Care
Insurance Variables
There are variables however, which may cause your assets to deplete, even if you carry long term care insurance. Understanding the coverage such policies provide and knowing the options available are your first defense. You need to make sure that the policy you purchase is for a long enough period of time.
Experts recommend taking out a policy that covers four years of long term care. Statistically, this will be more than sufficient for the majority of people who enter long term care. If your policy is only for a year or two and you spend much longer in such care, then your personal assets will be used to pay for the costs, once the insurance has run out, thereby nullifying your reasons for having taken the insurance to begin with.
You must also take into consideration the length of the elimination period. If you choose a longer elimination or waiting period before benefits kick in, you will have to finance that period of time yourself. If that period significantly diminishes your net worth, then your policy may be in vain.
If you take out a long term care insurance policy at a relatively young age but do not include a rider on it to protect yourself against inflation, then you will in all likelihood be spending your own money at the same time as you are collecting benefits. The amount of coverage most people initially choose for themselves is often inadequate if it is not used for 15 or more years. Protect yourself and your assets by making sure to include inflation protection, especially if you are young.
Similarly, when you decide on the amount of coverage, make sure that the daily amount you choose is reasonable for the geographic area where you expect to be living should you need long term care later in life. For example, if you live in a small town far from urban areas and health care costs are low, but you have a second home in a Florida city where you plan to retire, you should base the amount of daily coverage you carry on the costs in the city where you plan to move.
Long Term Care
Insurance Exclusions
There are also exclusions in every policy. If you intend for a family member to be the person to take care of you should you need long term care, then you may not want to invest in long term care because most policies exclude care by family members. With the exception of Alzheimer’s and dementia, most mental conditions are excluded from long term care policies.
Injuries that you cause to yourself and problems associated with alcoholism and drug abuse are also typically not covered. If you suspect that something of those types may necessitate long term care in your future, avoid these policies as well. It is not the way to protect your assets in such cases.
There are also a number of health related costs that may or may not be covered by your insurance such as drugs, alternative types of treatment, ambulance services, medical equipment, respite care, amongst others. Such costs can accumulate and cut into your assets as well, although often you can pay to have them included or shop around for policies where they are already included. Make sure you carefully read and understand what your policy does and does not include.
Compare Long Term Care
Insurance Quotes Now!
By making educated choices in choosing your long term care insurance policy, you can protect your finances. There is no need for sickness that requires long term care to completely use up all of your personal wealth unless you choose to go that route. With a good financial plan and a comprehensive long term care insurance policy, you can leave exactly what you want behind and not worry about it.
The best way to make sure you get the policy you want is to compare multiple quotes side by side. Our free long term care insurance quote tool makes this process quick and easy.
Put your zipcode in at the top of the page and compare multiple long term care insurance quotes side by side!
