Long Term Care Insurance


Long term care insurance is the retiree’s version of disability protection. It pays a specific amount (usually expressed as a daily or monthly amount) that can be used to pay for nursing home or home health care if you can no longer take care of yourself. It is a great estate planning tool to protect your assets in retirement, much like disability protects your income before retirement.

Activities of Daily Living

If you’ve looked into Long Term Care coverage, you’re already familiar with Activities of Daily Living (ADL’s). These are claims triggers. Most companies consider you eligible for benefits if you can no longer perform two ADL’s. They are:

  • Bathing

  • Toileting / continence

  • Transferring (as from a bed to a wheelchair)

  • Eating

  • Dressing

Other issues that need to be considered when buying a policy are:

Length of Benefit Period

Most good disability policies pay benefits to age 65, but Long Term Care policies are not as standardized. You can pick benefit periods ranging from two years to lifetime. Six years is probably the most common we see here, but everyone has their own reasons for selecting a particular benefit period. The longer the benefit period is, the more expensive the coverage is.

Amount of Benefit

Since the amount of benefit you buy dictates how much insurance is available on a monthly or daily basis, you must take local costs into consideration. A semi-private room today begins at around $200 per day, or $6,000 per month. Depending on your age, consider inflation protection to protect yourself from the constantly increasing cost of these services. Companies now offer up to $400 or even $500 per day benefits.

Home Health Care

Home health care benefits should always be considered in a policy, since most people would rather receive care at home than in a nursing home. Home care costs less, too, often extending the length a policy can pay benefits. Some companies make the distinction between home care offered by professionals and home care offered by anyone (including family members).

There are many new long term care insurance providers today, and while we have access to just about all of them, we like a few especially:

Unum/Provident— offers a lot of choice, good pricing, but a little stingy on underwriting. Structured after their successful disability line-up, it’s a good fit for many people.

John Hancock—has a new redesigned policy that is fantastic for people not yet retired who want to pay a policy up by age 65 (or over a period of years)—effectively pre-paying a retirement expense while your income can support it most easily. Also has a variety of policy options, and is competitively priced. John Hancock also tends to be more open with underwriting, taking many aspects of a person's health into consideration, but underwriting has been taking longer than others due to the popularity of their product.

GE Financial—GE bought Travelers’ long term care business, and has continued their successful history of innovative product design, and great service.

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