If you are over 65, married, and want to protect your spouse from financial loss, is it more important that you have life insurance or long-term care insurance? According to a recent AARP article, if you fit the above parameters (a married couple over 65), the odds that one of you will become disabled and incapable of handling your own affairs is 28 times greater than the likelihood that one of you will die before that occurs. Given those odds, I think everyone should consider purchasing long-term care insurance, and I’d like to offer some tips that can help you with that decision:
Buy long-term care with your spouse or partner. You may be able to get a discount—as much as 30 percent. You may also want to consider an extra feature called shared care, which allows a couple to pool the benefits of each other’s policy. For example, if you each purchase a $200,000 benefit and your spouse uses just $100,000 of his or her benefit, you can use the remaining $100,000 benefit if need be.
Consider inflation coverage. The cost of long-term care has been rising faster than the rate of the inflation. Protect yourself.
Purchase a policy before your birthday. Long-term care insurance policies are health-related, and that health is based on your age. Therefore, you can potentially save money if you buy a policy before your next birthday.
Look at qualified policies. By definition, a qualified policy qualifies for a tax deduction. Some of them offer fewer benefits than nonqualified policies, so you need to decide whether the tax deduction or the benefit is more important to you.
Shop around. When looking at long-term care policies, I suggest you shop the company first and then the policy. I’ve been working with retirees long enough that I’ve seen a lot of long-term-care companies go out of business.
Get professional advice. Decisions about long-term care insurance are complicated. A professional may be able to help you structure your policy so that you pay the lowest premium for the protection you need. We don’t sell long-term care insurance at Money Matters, but we do offer advice regarding purchasing long-term care as part of a comprehensive retirement plan. We’d be happy to help you.v