My husband and I just guaranteed our room reservations, but we're not off for a romantic getaway at a quaint inn.
The reservations are in a nursing home, and are one of the more obscure features of the long-term care insurance policy we purchased. Even though we'll be paying a premium of $269.57 every month for the rest of our lives, we'll consider ourselves lucky if we never see a penny of that money again.
On the other hand, if we're unlucky, as 60 percent of Americans who reach age 65 eventually are, we'll require some form of long-term care before we die. But because of our long-term care insurance policy, we sleep better in our own bed now, confident that we can meet our future needs whether we're in a nursing home, an assisted-living facility, or using in-home providers. Should we become incapable of taking care of ourselves, or each other, we will have options.
Over the next few years, millions of baby boomers will have the same questions that we had when we began researching long-term care issues, or at least they should. As with many other important things in life, ignoring an unpleasant topic like long-term care insurance won't make the need for it go away.
The first and most important decision to make is whether long-term care insurance is right for you. The answer will depend on a number of tangible factors such as your assets, your life expectancy, and your projected income as you age. Equally important are intangibles such as whether you want to be in control of your own fate, or at the mercy of someone else-or the government-should you become disabled.
I began my research by reading what respected financial writers and planners had to say about the need for long-term care insurance. I also visited several Web sites, although many of them provided me with a bad case of information-overload.
The single most important document I found, and one I recommend you study thoroughly before buying long-term care insurance, is A Shopper's Guide to Long-Term Care Insurance, a publication of the National Association of Insurance Commissioners.
Once my husband and I decided that purchasing long-term care insurance was one of the best steps we could take to secure our financial future at our age-I'm 55, he's 49-we met with a specialty broker who sells only long-term care insurance. Don't meet with a broker until after you are well-versed in the basics, independent of what the broker will tell you. If you do so, you will be in a better position to assess the broker's advice.
Our broker, Gary Chwazik, of ACSIA/Specialty Planners, was knowledgeable and helpful. He didn't try to force anything on us. Of course, there's always the danger of ending up with a broker who is more interested in the size of his or her commission than in your needs and budget. To avoid that scenario, I recommend using someone who has a long track record in selling long-term care insurance and represents only companies offering top-rated policies.
Once you decide you need and want long-term care insurance, the next step is to determine how much it will cost and what coverage you can afford. Our broker was very helpful in this area, but there are also numerous calculators available on the Internet to help you determine the costs of various plans. I found the federal government's long-term care Web site easy to use and recommend it for making initial comparisons. Even those not among the estimated 20 million people eligible for the federal government's long-term care insurance plan can use the information to help estimate the premiums for different levels of coverage in a large group plan.
Finally, after you've decided that you need, want, and can afford long-term care insurance, the most difficult part of the process begins. You must compare policies, feature for feature and dollar for dollar. You must make three major decisions that, in sum, will determine the price of your policy: (1) the daily benefit allowance; (2) the waiting period, or number of days for which you will pay before benefits start; and (3) the number of years you will receive benefits. Each factor is crucial in determining not only the total amount of benefits you will receive, and when they begin and end, but also your future out-of-pocket costs and premiums you will pay for the rest of your life. Once again, calculators-and brokers if they're knowledgeable and reputable-are invaluable.
I cannot overemphasize the importance of the last step, no matter how monotonous it becomes. As with any major purchase, caveat emptor, or buyer beware, should be your guiding principle. At the very least, crunching the numbers and understanding the fine points before you file a claim will help you make sure that the benefits you've been paying for are exactly what you've expected. At the most, this process will save you money, as it did us.
Although my husband and I are eligible for the federal long-term care insurance plan, we saved $61.37 per month by purchasing a private plan that is better in several important ways for us (e.g., benefits that restore themselves once used, spousal discount, and paid-up spouse benefit) than the most comparable government plan available. On the other hand, the government plan offers certain features ours doesn't, such as the flexibility of weekly benefits, international coverage, and paid in-home care by a family member.
By choosing a plan that best meets our own needs, we're saving $736.44 per year, or $22,000 over the next 30 years we expect to be paying for it. We like the idea of having that sizeable chunk of money to invest or spend elsewhere.
Maybe I'll make reservations at a bed-and-breakfast after all.
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