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The best time to get long-term care insurance

long-term care insurance
Often times, those seeking long-term care only think about the cost of these services once they need them. This generally results in severe shock. According to Genworth Financial, Inc. (GNW), which sells long-term care insurance, the average cost of a semi-private room in a nursing home in the United States is more than $ 77,000 annually.

For many seniors, long-term care insurance is an option worth considering. It may not make sense to those in the highest income stream, whether they are wealthy enough to finance their care or are eligible for Medicaid. But for those in the middle, evaluating the pros and cons of these policies is a useful exercise.

If you conclude that long-term care insurance makes sense to you, the timing is critical. Those who register too late may be burdened with higher bonuses, or worse, not be eligible for a policy. On the other hand, logging in too early can result in you paying many years of insurance premiums before you need care.

The best age to buy.

The American Long Term Care Insurance Association (AALTCI) recommends that people follow a policy in the mid-1950s. This may sound early, given the vast majority of claims that occur when people are between 70 and 80 years. However, the organization argues that those who survive may not qualify if their health declines.

While the Affordable Care Act prohibits traditional health insurance companies from excluding consumers due to pre-existing medical conditions, the bill does not include long-term care policies. While people need help with activities like showering, dressing, or having conditions like Alzheimer's and Parkinson's, they may be left with higher premiums or their application may be rejected. According to AALTCI, almost 23% of applicants in their sixties rejected coverage, while only 14% of those in their fifties were rejected.

Get rates are only higher

Another reason to be proactive about long-term care insurance is that premiums correspond to age. Every time people in their fifties reach a new birthday, the annual premiums they will normally be charged increase by 2-4%. Once in the 1960s, premiums go up 6-8% for each year of life.

To obtain the same amount of coverage, a person who waits until age 65 to purchase a policy may be charged more than double the premium paid by an individual who purchased their plan at the age of 55. If the consumer is like most Americans, they will not make a claim until they are at least 80 years old. Even with an additional 10 years of installments, buying insurance at the age of 55 can save you a lot of money in the long run.

Consider protecting inflation

If you bought in the mid-1950s, you will likely pay for more than two decades before filing a claim. But due to inflation, the value of the coverage you buy will not be nearly the same as it is today.

Consider the person who buys a $ 150,000 policy and does not need it for 20 years. If long-term care costs increase by 3% per year on average, then insurance equals only $ 83,051 in protection.

Fortunately, many current policies come with inflation protection. The amount of interest grows with a fixed amount each year or doubles at a certain rate annually. Of course, you will pay a lot more in installments to get this added advantage. But if you're concerned about minimal protection when you're old, it could be a sacrifice worth making.

The bottom line

If you decide that long-term care insurance is the best way to prepare for long-term care needs, there are advantages to buying it before you get to the 1960s. Not only will it increase your chance of getting approval, but most cases will also benefit from a lower rate. Be aware that pre-existing conditions can also affect your ability to obtain coverage, in addition to your cost.