Long-term care insurance is nothing short of valuable—but it can also be a hefty expense for retirees with no income. There are ways to design your policy so that you can save some money on the premium costs; however, you must be careful not to cut your benefits so much that the policy isn’t worth much more than the paper it’s printed on. Here are two things you can do to protect yourself and reduce your premiums.
Consider What You Can Realistically Self-Insure
We all essentially self-insure the portion of long-term care expenses that our policies don’t cover. That means we’re self-insuring whatever portion is in your waiting period. Your waiting period is defined as the amount of time you have to pay out of your own pocket for LTC assistance before your policy will cover the cost. The shorter the waiting period you choose, the sooner insurance will cover your costs and the higher your premium will be. When you have a reasonable idea of what you can cover out of pocket, you can save money on premiums without designing your policy so that your care comes up short.
Project Reasonable Costs
Another big factor in determining your LTC premium is in the daily and lifetime benefits of your policy. These limits dictate the maximum amount the policy will pay out per day for the care provider or home you choose as well as the overall time period the policy will provide benefits. If costs exceed this limit, it’s up to you to pay them out of pocket.
Getting prices from the nursing homes and home healthcare providers in your area will help you determine what a reasonable daily benefit limit is. While you can’t determine the exact effect inflation will have on these costs, you can decide whether to design the policy with added inflation protection.
When it comes to the lifetime limits, find out the statistics regarding how long people generally need long-term care before finally needing medical care covered by Medicare. In many cases, you may only need a few years of long-term care before your health deteriorates and you need more advanced assistance.
One other way that some are saving on long-term care protection is through buying hybrid life insurance policies and annuities. We’re going to discuss those in detail later on this month, so make sure you bookmark this page or add us to your feed reader!