Long-Term Care Insurance
Long-term care insurance is the new “star” of group health plans and is widely being used by employers to help attract and retain top performers. In fact, according to a recent study, 45% of companies are now offering long-term care to their employees in addition to their group health plan. Let’s face it, on the plus side, we are living longer and working longer. But, with that longevity comes some health risks that could require long-term care.
We are often asked what long-term care insurance is and how it differs from disability insurance. Long-term care covers a wide array of items, such as medical care, and personal assistance for a long period of time after an illness, accident or other debilitating event. It’s true that long-term care insurance evolved from income disability insurance. But, major medical insurance (or disability insurance) does not protect in the same way.
For instance, a group health plan may cover 30 days of recuperation time. A long-term plan will cover two years or more. Another difference is that disability insurance replaces only the salary at the time of the injury, not the cost of care. This means that without a long-term care policy in place, the employee would have to pay for all ongoing medical care that resulted from the injury. Medicare is not a viable option for these expenses as it only reimburses for a maximum of 100 days, with the average repayment lasting only 28 days.
Long-term care insurance was designed to combat the high costs of long-term care and is available in two different types of policies – individual and group. Individual policies are usually purchased when an employee’s company doesn’t offer long-term care insurance. What types of services do long-term care group plans cover? The most common services covered are:
- Nursing homes
- Assisted living facilities
- Adult day care centers
- Home health care
- Personal care
In general, the premiums are usually determined by the benefits provided and the employee’s age at the time of enrollment in the plan. Most group health plans will pay a maximum daily benefit and a lifetime benefit whose amounts are chosen at the time the policy is purchased. Other things to consider when choosing your company’s long-term health care policy are the types of inflation protection available, such as:
- Automatic inflation protection - With this type of policy, benefits increase at a fixed percentage without changing the premium.
- Special offer inflation protection - Here the purchasers can periodically choose to increase the benefits. In this case, the premiums increase as the benefits increase.
Automatic inflation protection. With this type of policy, benefits increase at a fixed percentage without changing the premium.
Special offer inflation protection. Here the purchasers can periodically choose to increase the benefits. In this case, the premiums increase as the benefits increase.
Whole Life Insurance - Is it a good fit?
When it comes to life insurance, you want to get the policy that fits you best. That policy may be whole life insurance because of the stability and certainty. What do we mean by that? Well, once the whole life coverage policy has been issued, it’s there to stay. The only way to lose it is to either cancel it with non-payment or in cases of fraud.
Whole life insurance has some advantages over term life insurance. For instance, it doesn’t expire or lose value; part of the premium builds value that you can borrow against; the rate you pay initially will never increase; and it includes a guaranteed death benefit for your heirs.
Cost can be a determining factor though. Whole life insurance is more costly than term insurance for the same coverage. Again, it all boils down to what you need your financial profile to do. Whole life insurance has benefits that you can use while you are alive. You can borrow against it or use it to pay for future premiums. And there’s a tax advantage also. Any money you withdraw from your whole life policy is not taxable until you withdraw more than you have already paid in.
Or, you can use the cash value of your policy as collateral for loans. And, creditors can’t touch it. Sound interesting? Sit down with your life insurance agent and discuss your life plans and see what they suggest. Bottom line is that you want to protect the people you cherish when you die – both whole and term life insurance will do that.
At ARCW, our knowledgeable insurance agents are here to get you the right policy for your needs. Unlike some of the national insurance agencies, we know who our customers are and work with them one-on-one to get the right coverage at the best price. Contact us today to get your free quote and see how much you could save.