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Be Wise With Money

Six Myths About Long-Term Care Insurance

Learn the details of LTC insurance

You're in good health, you've set aside money for retirement, you've made a will, and your house is close to being paid off. You've done everything to make sure you and your family are provided for, right? But you may have overlooked one major thing: What happens if your health lets you down? When people think about long-term care many brush it aside with comments such as, "It costs too much" or "Medicare will cover me." Unfortunately, their reasons may be based on lack of information or just bad information. Below, we crack six typical myths about long-term care insurance (LTCI).

1. "I'm too young and healthy to need that."

But long-term care insurance isn't just for seniors. Anyone age 18 and over may buy it, and of those who have typically needed its benefits, 40% are between age 18 and 64. And the average age of contract buyers is now in the mid-50s, according to the American Association for Long-Term Care Insurance's 2013 data. But age shouldn't be the main factor for purchasing.

"If you're in poor health, you can't get it at any cost," says Anthony Valazza, a Thrivent Financial representative in Arcadia, California. "If you need it when you've been diagnosed, or you're in the nursing home already, it's too late. Buy it when you're healthy."

2. "I can save enough on my own."

Even if you're putting money into an account specifically for future health care costs, don't assume it will be enough. According to the U.S. Department of Health and Human Services, in 2010, long-term care costs averaged as much as $230 a day. At that rate, it wouldn't take long to deplete a lifetime of savings.

3. "My family will take care of me."

You have a loving family who have said they'll always be around to help you when your health fails. However, that promise typically comes when someone is healthy. Will your kids still be able to keep that promise when it's time to bathe, dress and feed you daily? And would you really want them to? "Caregiving is like taking on a second full-time job," says Debra Newman, founder of insurance consulting firm Newman Long Term Care in Richfield, Minnesota. That may not be realistic for most families, no matter how much they want to help.

4. "It's nursing home insurance."

Not so. According to the American Association for Long-Term Care Insurance's 2013 LTCI Sourcebook, approximately 7.6 million individuals currently receive care at home, compared with just more than 1.8 million individuals who are cared for in nursing homes. Long-term care insurance covers adult day care, home care and assisted living, along with nursing homes. Some policies will pay for home modification and other necessary training and support to help a person remain in the home. "Today, it's more stay-at-home care, so you can have a normal standard of living," says Thrivent Financial representative Arnette Garris, Lincoln, Nebraska. Long-term care is about the services, not the place.

5. "Health insurance will cover my bills."

That depends on where, when, why and how you're receiving medical care. Health insurance only covers hospitalization and skilled care while you're there. If you need to switch medical providers and places during an illness, coverage guidelines will vary. And Medicare isn't intended to take care of you long term. There are strict rules about who qualifies for the coverage, what it will cover and for how long – and it's more prohibitive than most people realize.

6. "It's too expensive – I can't afford it."

Truth is, there are different costs for different long-term care contract features.

"While it's true that the younger you start coverage, the less you'll pay in premiums, it's important to try to find something you can afford and that will meet your needs," says Valazza.

According to Newman, there are many factors that affect the price – from your age and your health at the time you purchase the contract, to the specific benefits you want. You can just get the basics covered or you can choose to purchase a contract that offers more features. And, many long-term care insurers lower that with discounts for married couples, good health records and other pluses. "If you can afford $50 a day in benefits, then you only have to buy that. Something is better than nothing," says Newman.

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