What you need to know about Long Term Care
Elderly people require Long term care is when they need someone to care for them because they will not be able carry out a number of every day normal activities without support from someone and it is considered this will occur indefinately. It consists of assistance with day to day personal actions such as bathing, putting on clothes or toileting and can occur at home, in residential or nursing care.
The need for care can occur instantly without warning, such as the result of a stroke or heart condition. On the other hand the need for care could evolve progressively as the persons dependency iincreases due to lack of mobility or dementia.
Why take out a long term care immediate needs policy. Essentially predicting life expectancy is not a precise science. When people pay for their own care they may live longer in a good care home but their money could run out. An insurance care plan policy guarantees life time payments.
The risk of a life time care insurance policy is that if a person dies early the original outlay is lost unless there is an element of insurance against premature death.
The lump sum cost of the care plan is determined by a person’s age, sex and state of health which is assessed following receipt of medical information from the nursing home and the client’s doctor. The more ill and frail a person is – the lower the premium will cost as, the cost is directly linked to the life insurance company’s view on the person’s expected lifespan.
The lump sum premium is calculated by taking the shortfall between the income coming in and the cost of the care fees going out and insuring this shortfall by payment of a single premium to an insurance company. Indexation or escalation of benefits can be included to cover the usual annual price increases.
When arranging the annuity, it is a good idea to ask the care provider about the history of price increases so that this can be taken into account when arranging the level of benefits required. Better still ask the care provider if they will agree to fixed annual fee increases at say 5% in return for direct increasing payments into their account.
Obviously, if the care costs rise above the cover of insurance bought there could be a further shortfall but, to all intents and purposes this is usually manageable from other savings, unless the level of care required has altered drastically. In this case, a further review of the situation should be done before parting with more funds. For example, the care needs may have escalated to the point of the person becoming eligible for free personal care known as ‘continuing care’.
long term care plans have a significant tax saving benefit in that there is no tax liabilty on the person in care when benefits are payable direct to a registered care provider.
Everything you should find out about long term care insurance policies at your disposal, simply about long term care insurance for your vital facts.
