Insurance & Long-Term Care
At CURO, your priorities come first. Insurance often seems like a gray area where you know you need it, but you don’t necessarily know what YOU need. We take the time to learn about you and your family’s needs, and put them in the bigger picture. Is life insurance something that would benefit your family? Is long-term care insurance something you should purchase? How much or how little? And why?
We have all seen the commercials for life insurance: “It’s something we must all think about….Protect family and loved ones from the financial burden of a funeral and ‘final expenses’…” But are you really sure you understand the consequences of not having and having life insurance and/or long-term care insurance?
WHAT IS LIFE INSURANCE?
When an individual dies, the financial support he or she provides for the family ends, and yet, the family’s need for income continues. Life insurance provides financial protection for dependents who are left behind. In addition to funeral expenses, life insurance can help pay for housing, transportation, medical care, food, clothing, and possibly education and day care. It can also be used to pay off a number of debts—for examples, a home mortgage, an automobile loan, or a credit card – relieving family members of the financial burden. It can also be used to pay off estate taxes – both state and federal – and to actually create an estate.
WHAT IS LONG-TERM CARE INSURANCE (LTCI)?
If you sign up for long-term care insurance, or LTCI, it pays up to a selected dollar amount per day for a selected period of time for care in nursing homes and other settings, such as home health care. Since Medicare and other forms of health insurance do not pay for these types of custodial care, many nursing home residents and home health care recipients have only three alternatives for paying their bills: their own assets-either cash or investments, Medicaid, and long-term care insurance.
WHAT IS THE DIFFERENCE BETWEEN THE TWO?
Life insurance provides no immediate benefits to defray the costs of long-term care, unless you have a policy that allows you to tap into your death benefits early. It is intended primarily for use after you pass away. LTCI pays for your long-term care costs as you incur them. Depending on your policy, LTCI may pay for care anywhere: in an assisted living community, at home, or in a nursing home. Thus, it is primarily for use while you are alive.
HOW IS LTCI USEFUL AS A PROTECTION PLANNING TOOL?
The risk of contracting a chronic debilitating illness – and the resulting catastrophic medical bills incurred – is considered by many to be one type of risk best passed on to an insurance company by purchasing a LTCI policy. A number of factors can increase your risk of requiring long-term care in the future. For one thing, your health status affects your likelihood of incurring a long stay in a nursing home. Indeed, people with chronic or degenerative medical conditions (such as rheumatoid arthritis, Alzheimer's disease, or Parkinson's disease) are more likely than the average person to require long-term nursing home care. Because the cost of long-term care can be astronomical and may exhaust your life savings, purchasing LTCI should be considered as part of your overall asset protection strategy.
HOW MUCH COVERAGE IS ENOUGH?
Insurance protects against an event that might happen in the future. Therefore, buying enough protection is important but so is affordability. You need to consider several factors:
How much will care cost when you’re most likely to need it (typically your 80s)?
How much will care cost in the area in which you plan to retire?
How much can you afford to spend now to protect from those costs in the future?
Do you have other income sources or assets that you can dedicate toward your future care needs?
FINAL THOUGHTS…
Well… this is certainly a lot of insurance information to absorb! As an overview, life insurance should be thought of as a payout that protects your dependents once you pass. LTCI protects YOU prior to death if the need for nursing home or special long-term care arises as the result of an illness or disability. LTCI helps you protect your savings and independence by not having to depend on your family to pay for or provide the specified care. At CURO, we can help you figure out if life insurance and/or LTCI is right for you and how much, so you won’t have to worry!
*Fixed insurance products and services offered through CES Insurance Agency.