Who Needs Long Term Care Insurance

Who Should Consider Purchasing a Long-Term Care Insurance Policy?

Qualifying for a long-term care insurance policy means being healthy. (Not everyone can qualify medically and, for some, there are other alternatives). For many people, it is worth the cost and is affordable, but others may not be able to afford a policy with enough benefits to make it worthwhile. Some of the people who should consider buying long-term care insurance are:

  • Individuals with significant assets and income and those wanting to protect those assets from the cost of long-term care services;
  • Persons who want to maintain their independence and not have to rely on friends and family for financial or physical support;
  • Those who want to have the choice about where and by whom they will receive long-term care services;
  • People who can afford to pay the premiums every year in the future, including the possibility of premium increases, without experiencing financial hardships in doing so.

Some applicants who apply for long-term care insurance coverage do not qualify for the insurance. In other words, they are uninsurable. Applicants must meet certain medical underwriting requirements in order to buy long-term care insurance. Therefore, someone who is in good health should consider applying for and buying long-term care insurance while they are still able to qualify medically. (Medically underwriting means that the insurance company uses an applicant’s personal health information to predict the likelihood that they will need long-term care and make claims against the policy. Each company has its own underwriting standards, which means one company could reject an application while another would be willing to accept it.)

Anyone who is in poor health, already in a nursing home care facility, or receiving long-term care services would not qualify medically and would not be a candidate for long-term care insurance. The National Association of Insurance Commissioners (NAIC) suggests that long-term care insurance premiums should not consume more than 7 percent of a person’s income (NAIC, n.d.). Individuals who often have trouble paying for their utilities, food, medicines, or other important needs or those already receiving Medicaid benefits are unsuitable prospects. Additionally, if a person’s only source of income is a Social Security benefit or Supplemental Security Income (SSI), long-term care insurance may not be advised.

You should consider that the family members of some low-income seniors might be willing to pay the premiums in order to provide benefits for the type of care desired by the family.

Who Typically Buys Long-Term Care Insurance? Who Doesn’t?

We know certain traits of individuals who choose to buy long-term care insurance policies and those who don’t. The major difference between buyers and non-buyers is that the latter (non-buyers) tend to be somewhat older, are more likely to be male, less likely to live in a household where someone is employed, and less wealthy than are buyers of LTC insurance (HIAA, 2005). Those who didn’t buy long-term care insurance cited some of these reasons for their decision: the cost was too great; there was too much confusion over which policy to buy; they were waiting for better policies; they believed they would never need the services; they believed they would be able to pay for the care using their own income and assets.

The information above is reprinted from Working with Seniors: Health, Financial and Social Issues with permission from Society of Certified Senior Advisors® . Copyright © 2009. All rights reserved. www.csa.us