13 Jun How do I choose the best long-term care policy?

Q. What long-term care policy makes the most sense with all the choices out there?
— Overwhelmed

A. One of the major concerns for retirees is the rising cost of health care, especially the potential need for skilled assistance later in life

Long-term care insurance – if you can afford the premiums – can make all the difference.

“Choosing a long-term care policy is like learning to fly an airplane,” said Nicholas Scheibner, a certified financial planner with Baron Financial Group in Fair Lawn. “The amount of dials, switches and options there are would make any student pilot queasy.”

Scheibner said a policy can be adjusted by increasing the elimination period, decreasing the cost of living adjustments, specifying the daily benefits, adding a life insurance component, adding home care options and more.

It’s a handful. Plus, each company prices the components differently, and each company has different expected premium increases, he said.

So which policy makes the most sense? Of course, it depends on your specific situation.

Some things to consider:

For single individuals, the options are a bit more limited, Scheibner said. Typically, women are charged more for long-term care because based on actuary tables, they’re more likely to use the policy.

For couples, the options become a bit clearer, Scheibner said. A couple can choose what’s called a “Shared Pooled Policy.” This is a policy that defines a set “pool of funds” that can be used by either spouse.

He offered this example: You and your spouse own a $300,000 Shared Pooled Policy. You can use all the of the $300,000. Your spouse can use all of the $300,000. Or you can use $100,000 and your spouse can use $200,000. This alleviates the concern of “which one of us is going to need this?”

“It has become very expensive to find a long-term care policy that will cover your needs for an unlimited amount of time,” he said. “Those who currently have those policies have seen major premium increases in recent years.”

And, Scheubner said, be careful of annuities that have a “long-term care rider.” He said this can be a more costly option than just searching for a separate long-term care policy.

“With any insurance, there is the chance that you do not use any of the funds provided by the policy. This should not be looked at as a `waste’ or `lost money,’” he said. “Insurance is there to protect you in the event something happens. There is value in being protected, just as there is value in having life insurance when you have young children, even if you never use it.”

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This story was originally published on June 13, 2019.

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