If it's gonna be a nursing home, make it a nice one.

Long term care insurance is a something many of my clients ask me about. The big question is, "do I really need this?" Well, first, it's like most insurance, if you can't afford it you don't need it. But also, like most insurance, you need to determine the likelihood of needing it and the cost of not having it.

So what does it do? Basically if at some point you weren't able to take care of yourself any more and needed professional, paid care Long Term Care (LTC) would help pay for that. Statistically over two thirds of people over 65 end up needing some form of skilled care like home health or full-time nursing home. Facilities like that can cost anywhere from $150-$500 dollars a day, depending on where you live. So, a LTC policy can help you protect other assets by paying you a monthly amount to cover those costs. How do I get it? Basically there are two great ways to get this type of coverage.

First, there's a traditional LTC policy. You pay a monthly premium in exchange for a daily amount you need to cover nursing home expenses. This amount is determined by the cost of care in your state and by the amount of money you'll have through income to cover the difference. For example, if skilled care costs $250 a day in your state and you have $100 a day of income ($3,000 per month), then you'd want LTC to pick up $150 a day.

The second way to get this coverage is to add a "chronic illness rider (rider = add-on)" to a good guaranteed for life life insurance policy. The way these work is if you're no longer able to take care of yourself (chronically ill), as determined by a physician, you are able to access the money your life insurance would otherwise pay out to your beneficiaries to cover the costs of skilled care. There are a couple advantages to this. Your beneficiaries get a large lump sum if you pass away and haven't used all the funds, and many of these policies have cash value you could access for any need (like a nice trip to the beach).

As with all insurance decisions it's important to work with an agent who truly understands the nuances of each option. While they both have pros and cons most times one is a better fit than the other based on each person's individual needs. Get in touch with a team member at Covenant Insurance and we'll help you make an informed decision.

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