When the time comes to start looking at long-term care options, many find that what is available for complete coverage is far beyond their reach. The fear of having no insurance in your older years is apparent for many citizens across the country.
Recent reports suggest that the average retired couple at the age of 65 is likely to have roughly $240,000 in medical expenses throughout their retirement years. Perhaps that number at first glance does not seem that much. However, if you compare that, though, to the fact that only 20 percent of those who work past the age of 55 have $250,000 or more set aside, then you start to see a clearer picture.
You see, overall, more retirees have less money set aside to cover the likely medical expenses than those who can afford it. Keep in mind that this number doesn’t include long-term care costs. If long-term care coverage is out of reach, you can see the issue forming.
What is causing long-term care to be out of reach for so many that need it? Interest rates and increased life span are two factors contributing to this issue. Modern medicine has worked to keep people alive and somewhat healthy for longer than before. It’s not a question of just how long will someone live for. Instead, it’s how healthy will that person be and for how long? This answer plays a role in determining insurance costs and the attached interest rates, making long term care plans unaffordable for many.
Children of the baby boomer generation are helping their parents pay for their long-term care premiums. Not only that, many policyholders don’t realize that the policy they have, may not provide full coverage just so they can get an affordable premium.
Luckily, though, insurance companies have taken notice of the issue, and are making ways to provide multiple coverage options at more affordable prices. Long-term care insurance is evolving to suit the needs of multiple types of people that need it the most.
Insurance and Care Options
Insurance companies are taking the necessary steps to revamp how long-term care policies work to make them more affordable for everyone who needs them. One example is a hybrid plan of life insurance with a long-term care rider. The hybrid plan allows the policyholder to access a portion of their death benefit for qualifying long-term care expenses.
Another hybrid option is the life insurance policy attached with a chronic illness rider. This would be for someone who has an ongoing chronic condition that prohibits them from accessing regular long-term care. These two options have opened up the possibility of getting adequate coverage for those who initially couldn’t.
The Difference Between the Two
Both long-term care rider and chronic illness rider possess many similarities, the reality is that these two options are quite different and should be looked at in this sense. Knowing the difference between the two can help you formulate the best long-term care plan for you.
If you’re deciding between a long-term care rider or chronic illness rider, they both are considered an accelerated death benefit rider. That is because, as stated above, both options allow the policy owner to dip into the death benefit of their insurance policy. It “accelerates” the death benefit.
Life insurance policies that have a chronic illness rider attached will pay a fixed premium payment. The policyholder can access the rider if he or she becomes diagnosed with a qualifying chronic illness.
For the long-term care rider, this would get added to the insurance policy if the holder requires hands-on daily care that they cannot provide for themselves. Typically, this would come as a lump sum payment each month for a designated period.
Insurance policies and long-term care options continue to change, as more and more people require affordable access to them. The addition of a long-term care rider or chronic illness rider gives people more options to create a policy that suits them and is within their budget.
Don’t think that you have to go through retirement without any coverage. Speaking with your insurance broker about the different living benefit rider options can provide you with all the information needed to develop a policy best suited for your situation.