Planning for long-term care (LTC) is a key component of a well-designed retirement strategy. As people live longer and the cost of care continues to rise, preparing early helps ensure you can maintain your independence, protect your assets, and reduce financial stress on loved ones. If you have an estate goal, long term care insurance is worthwhile to consider to avoid depleting your assets from unexpected illness or cognitive impairment.
Below is an overview of the core considerations when evaluating long-term care insurance.
When to Purchase Long-Term Care Insurance
The ideal time to purchase LTC insurance is in your early 50s.
At this age, applicants typically:
- Qualify more easily based on health.
- Lock in lower premiums.
- Have years ahead for inflation protection to grow the policy’s benefit.
Waiting until your 60s or 70s often results in substantially higher premiums and may limit options due to health changes.
How Much Coverage You May Need
Most people do not require long-term care until their 80s, and the costs can be significant. Your coverage should reflect the type of care you anticipate, the facilities available in your region, and your broader financial plan.
A well-designed policy ensures that your monthly benefit meaningfully offsets care expenses without over insuring or straining your budget.
Understanding Elimination Periods
The elimination period is the waiting period before benefits begin. Typical options include 30, 60, or 90 days. Choosing the right elimination period depends on your financial resources and the type of care you expect to receive.
Benefit Duration
Policies vary in how long they will pay benefits. Typical durations include:
- 2 to 5 years (most common)
- Lifetime benefits (less common and more expensive)
On average, claims last around 3 years, making that a common duration for many policyholders.
How You Qualify for Benefits
Accessing benefits requires that you are either:
- Chronically ill, or
- Cognitively impaired.
This is usually defined as needing help with two of the six Activities of Daily Living (ADLs):
- Bathing
- Dressing
- Eating
- Toileting
- Transferring
- Continence
A physician must certify that the condition is expected to last at least 90 days.
Long-term care insurance is a powerful tool for protecting retirement assets and ensuring you receive high-quality care later in life. The key is planning early, selecting the right features, and integrating the policy into your overall financial plan.
If you would like help evaluating current policies or determining whether LTC insurance fits into your retirement strategy, reach out to your JGP team.
