Retirement & Financial Planning Report

Long-term care (LTC) insurance policies generally have many options for you to choose among. Examples include:

Inflation rider: This benefit might automatically increase your daily benefit by 5 percent a year, compounded. Such a feature will sharply increase the cost of a policy but it’s often best way to get inflation protection, if you can afford it.


Guaranteed purchase option: This allows you to buy additional coverage periodically, perhaps without a physical exam. Exercising this option can be expensive so it probably will not be a good buy unless you are in your late 70s or 80s, when long-term inflation is not a huge concern.

Shared-care plans: These allow a couple to split insurance benefits between them. If each has a policy that will pay benefits for three years, the six-year total may be divided unevenly. Such flexibility comes at a cost because the premiums may be higher than those of two individual policies.

Many LTC insurance policies pay benefits if you need to be in a nursing home. Most people, though, prefer to receive care at home. Therefore, it is vital to see whether an LTC policy will pay benefits for other types of care.

Home care. Some LTC policies pay benefits for home care but only if that care is provided through an employee of a licensed agency or by a certified home health aide. If possible, look for a policy that will pay benefits if home care is hired by any non- relative. You’ll have more flexibility and might wind up with a more desirable caregiver.

Assisted living. Many seniors now live in assisted living facilities. These facilities offer some services but residents have more independence than a nursing home offers. Assisted living generally costs much less, too.

Some LTC insurance policies cover expenses in an assisted living facility, but only if the place is licensed by the state. Check your policy before moving into assisted living.