When To Buy Long Term Care Insurance

Long term care insurance is designed to provide you with financial cover in the event that you require long term care due to illness or disability, and have to pay to be looked after by a caregiver, therapist or nurse.

Contrary to popular belief, long term care is not something that is solely reserved for those who are past the age of 65, or who are in retirement. In fact, 45% of individuals who need long term care are between the ages of 18-64, so it is important to recognize that this is something which you may require at any age.

For younger adults, the most common reason for requiring the assistance of a caregiver occurs as a result of injury, such as being involved in a car accident, and then as a result of the sustained injury, being unable to attend to basic needs such as getting dressed, washing and preparing meals to eat. Such activities are also known as “activities of daily living”.

In such cases, a person may require someone to look after them for a period of weeks or months, and without having such assistance, they would find life very difficult during their recovery period. Most young adults though, will only require assistance during certain periods of the day, which generally results in lower overall costs to receive that care.

For older adults, the need for long term care usually occurs as a result of a person suffering from a degenerative mental disorder, such as dementia or Alzheimer’s disease. In such cases, an individual is likely to require assistance throughout much of the day and for extended periods of time, typically years or until death.

Due to the fact that being cared for does not qualify as medical treatment, the cost of being cared for will not be covered by most health insurance policies. As a result, a long term care (LTC) insurance (LTCI) policy is required if one wishes to insure themselves against such expenses.

The extent of the policy that is taken out, and thus the cost of such a policy, can vary depending on a persons age, the reason they require assistance from a caregiver and the duration of care that they ultimately receive. However, broadly speaking, such policies will usually be cheaper for younger adults than for older adults, both in terms of the actual and lifetime policy cost.

Insuring Other Areas Of Your Life First

Taking out insurance is all about managing risk areas in your life, so that potential uninsured losses can be minimized.. The basic idea is to protect yourself against big financial losses first, and then to protect yourself against other forms of loss if you feel the need to do so.

For this reason, it is generally not recommended to take out LTCI until you have first insured other high risk areas of your life.

Some of the things you should have insurance for first include:

• Premature death (life insurance)

• Long term disability (disability insurance)

• Major medical bills (health insurance)

• Damage or destruction to your home (home insurance)

• Damage to your vehicle (car insurance)

• Large lawsuits (personal liability insurance)

Each of the items in the above list are all major forms of risk, and more importantly, are risks that you are exposed to on a daily basis. If you suffer a loss in any one of these areas and you do not have insurance, or adequate insurance, you may end up suffering a major financial loss that you could find very difficult to recover from.

So before taking out LTCI, it is wise to ensure that you are fully insured for each of the items in the above list and that you have equal coverage in each area.

Special Circumstances

It should be noted that whilst the likelihood of requiring LTC will be relatively low for the large majority of people, there are some individuals who face an elevated risk of requiring such care.

Your profession or your hobbies for example, could put you at risk of suffering from serious injury that leads to long term disability and the need for a caregiver’s assistance. So if you play contact sports, climb mountains, race cars or motorbikes or do anything else that poses a risk to your safety, LTCI is something that you should seriously consider taking out as soon as possible.

The same applies to those who have a family history of mental disorders such as dementia, as this also poses an elevated risk of you requiring assistance later in life.

If any of these two factors apply to you, then LTCI should be considered as a primary insurance need. As a result, it should therefore be something that you take out alongside your other primary policies, such as those for your health or your home.

Getting insured as early as possible will also help to save you money, as insurance tends to be far cheaper for those of a younger age. Furthermore, if you wait until you get injured or wait until you are already receiving care before applying for LTCI, your application will be denied as you will be ineligible for coverage.

This later point however, is most applicable to younger adults who suffer from a sudden injury that involves a prolonged period of recovery.

In such cases, not having LTCI will result in you having to pay for your care and suffering a large financial loss as a result. Or worse, not being able to afford to pay for the care that you require, and then having to struggle to look after yourself as you recover from your injury.

When Should You Take Out Long Term Care Insurance?

If you have insurance in the major risk areas previously mentioned, only then should you consider taking out LTCI.

There is an exception to this however, and that is if you know that you are going to be needing caregiver assistance in the future or think you will need it. The two factors previously mentioned, a risky profession/hobby or a family history of illness/disease, would be two examples of this.

But for the large majority of people, it is generally advisable to wait until you have insured the major risk areas in your life first. Because, at present, the risk of you requiring LTC is far less of a risk than some of the other risks which you are exposed to each day.

Although most insurers will give you the exact advice just given, most people still want to know at what age they should take out a LTC insurance policy, so that they can gain a rough idea as to when they should start preparing and saving for it.

This however, is extremely difficult to do, as without having a face to face consultation it is impossible to fully take into account your unique life circumstance. So to give you a very general idea as to what age you might want to take out LTC insurance, have a look at the age brackets below and use them as a starting point to help you make your decision.

20-30 Years Old

If you are in your 20′s or 30′s, taking out a LTCI policy during this period of your life is going to be the cheapest time to do it.

However, doing so will likely mean that you will have less money to spend on other primary insurance policies, and for this reason, most people in this age bracket should not insure themselves for LTC.

The exception to this, is if your profession or hobby puts you at risk of suffering from serious bodily injury.

40-50 Years Old

Your forties is a good time to start thinking about long term care insurance, as you will still be able to get insured for a relatively inexpensive amount. Getting insured in your forties will also allow you time to build up your policy, which will then allow you to have large coverage limits in your later years of life.

What stops most people getting insured in their forties is other financial commitments and responsibilities that they have. For example, having and maintaining other primary insurance policies are still the main concern at this age, and if you have a family, then you will likely require your spare funds to pay for expenses relating to your children.

So unless you are very wealthy, it is usually best to take care of your main expenses and responsibilities first, and wait another a decade before you take out a LTCI policy.

50-60 Years Old

Age 50 is generally considered to be the best age to take out long term care insurance. In your 50′s, you are likely to have sufficient money saved up to afford to pay for an additional policy alongside your other primary insurance policies.

In addition, because your children have probably grown up and moved out of home by now, you will also have more disposable income to spend on additional insurance without adversely affecting your current quality of life or your current living standards.

If you are in your early 50′s, or even mid 50′s, you can still get very reasonable rates on your premiums which will make taking out a policy at this age very affordable. You will also still have time to build up your policy so that you can have a good level of coverage when you are in your 60′s, 70′s or 80′s when you are most likely to require long term care.

60+ Years Old

Leaving long term care insurance until you are 60 years old will result in higher premium rates, as statistically, you are more likely to require care the older you get.

Some people however, may only be able to afford to take out a LTCI policy when they are in their 60′s. But providing that you are still in relatively good health, this shouldn’t be too much of a concern as you will still have 10-20 years to build up your policy.

If you have a family history of dementia, Alzheimer’s disease, arthritis, high blood pressure or diabetes however, you should seriously consider taking out a LTCI policy in your 40′s or 50′s. The reason for this is that if you start to require care in your 60′s, then it may be too late to take out a policy as almost all insurance companies will not insure you once you are already receiving care.

The best way to determine when you are likely to be affected by such medical disorders, or suffer from bad health, is to look at your family history. If for example, one of your parents started to shown signs of dementia in their 60′s, then preparing for long term care is something that you should plan for as far in advance as you can.

Doing so will allow you to build up your coverage to a reasonable level, which in turn will help to ensure that you will be adequately looked after in your later years of life.

Time Really Is Money

When it comes to buying long term care insurance, time really is money. If for example, you wait until you are ill to get insured, then you are likely to find that the costs of such insurance will be much greater than had you been in good health. You may even find that you no longer qualify for LTCI, as to the insurance company, you represent a risk which they are not willing to cover.

The cost of receiving long term care will only increase in the future. So the more you delay your decision, the more expensive getting a LTC policy will be. So by purchasing a policy as early as possible, it could end up saving you a lot of money later on.

Finally, the cost of a long term care policy increases with age. So put quite simply, the older you are the more you can expect to pay, which is another reason why you should consider taking out a LTCI policy as soon as possible.

Of course, it is also important to consider your current as well as your future needs. So you should not purchase a LTCI policy for example, if it means that you will be leaving other areas of your life exposed to significant risk. For most people, receiving LTC is something that they may require sometime in the distant future, and so is therefore not an immediate threat to their personal financial situation.

Other risks, such as being sued by a person who was injured on your property, your home being damaged in a fire or your car being damaged in a road accident which causes you bodily harm, are all much more immediate risks that could represent large uninsured losses if you are not adequately covered against them

Due to these factors, it is difficult to recommend an exact age at which an individual should take out LTC insurance, although in general, the earlier you can take out such a policy the better off you will be later in life should you ever require long term care.