Why Today's Long Term Care Insurance is Better

When it comes to paying for care, some people say they know enough about health care to keep them from getting into a financial collapse. However, the times have changed and the same goes with getting long term care.rnInsurance companies have faced challenges with keeping policies affordable due to a number of factors:

• Years of generous underwriting
• Current, lingering low interest rate environment

The long-term care insurance (LTCI) industry finds itself in the midst of a historic contraction, with both consumer demand and the playing field shrinking.rnToday's long-term care insurance is unlike your parents' policy, which comes with similar yet different features such as lifetime benefits and 5 percent annual increases in benefits as protection against inflation.rnRegardless of all the upheaval, LTCI is undergoing some sort of “reboot”, with many advantages for consumers in mind. Consider the present LTCI as “Long Term Care Insurance 2.0” or “LTCI 2.0.” LTCI 2.0 is much more versatile and focused on home health care rather than the nursing home variety. Should you fail the physical, there are alternatives for those who are denied coverage. Top Three Buyer Turnoffs Since the economic downturn, LTC insurers have been busy retooling their products to eliminate or minimize these top three buyer turnoffs: Use it or lose it Most people ask themselves when thinking of buying long term care insurance, 'Why am I going to pay all this money for something I don't think I'm ever going to use?'rnWhile LongTermCare.Gov says that 70% of people aging 65 can expect to rely on some long-term care related services or support, with three years being the average length of care, policies today, which pairs LTC coverage with life insurance, enable policyholders to draw on LTC benefits should they need them or pass them along as death benefits if they don't. Set it and forget it Before, LTCI was written this way: 1. Choose your amount.rn2. Project it 20 - 30 years into the future.rn3. Never look at it again. LTC policies today now include features such as "guaranteed purchase options," or GPOs, that allow you to increase coverage later in life and/or "contingent nonforfeiture" clauses that allow you to trim back benefits to monitor future premium increases. All or nothing In the past, agents sold long term care insurance policies to cover 100 percent of your estimated future care costs, regardless of your other assets.rnInstead of showing you the most expensive option first, insurers now offer good/better/best policy tiers on the philosophy that some coverage is always better than none. What to Do if You're Denied LTCI Today's more flexible LTCI coverage is a welcome change, especially for the majority of baby boomers who plan to age in place rather than in a nursing home. However, there are those who've been denied coverage for a pre-existing health conditions. What can they do to pay part or all of those future costs? Here are three solutions:

• Life Insurance with LTC rider

This option allows you to draw from your life insurance benefit to pay for long-term care in your home or an institution. Good news: The underwriting on life insurance is flexible than traditional long-term care insurance. Plus, if you don't need long-term care, you won't lose money on your policy. Bad news: It’s likely to be more expensive.

• Annuity with Home Health or Nursing Home Riders

A deferred annuity of $100,000 will give you an income stream, six or eight years later, of $7,900 yearly for the rest of your life. The rider will double that amount if you need home health or nursing home care. Good news: No medical underwriting and you can't outlive the income stream. Bad news: Not everyone can come up with upfront money of that amount.

• Reverse Mortgage

Most senior homeowners may be able to tap the equity in their home for long-term care expenses. Good news: There's no physical, premiums, or underwriting. Bad news: Heir homeowners will have to pay the loan back with interest at the end of the loan term or forfeit their home to the lender. There’s a saying on long-term care insurance, ‘Those who need it can't afford it, and those who can afford it don't need it.’ Most high-income earners typically self-insure, meaning they fund long-term care out of their savings, while low-income earners spend down their savings to qualify for Medicaid. Although there are alternatives to long term care insurance, applying for a policy still proves to be more beneficial, especially with the changes applied which mostly favors consumers. References: rnhttp://www.bankrate.com/finance/insurance/long-term-care-insurance-changes-1.aspxrnhttp://www.longtermcareprimer.com/