Long Term Care Authorities
There are generally two types of long-term care insurance policies that have different payment plans.
The first type has a yearly cost of about $3,000 to $7,000 thousand dollars.
This type of insurance is similar to car insurance, in that you pay an invoice each year and you may not need any of the benefits. Just like not having an automobile accident, if you have no major health issue, then you pay your premium but do not receive any benefits. Also, like auto insurance, the cost of insurance can rise over time. Therefore, you may pay a larger and larger amount and still not receive any benefits - - but hopefully your good health is the real goal.
The second type is a single pay plan.
This type of insurance has you pay upfront to receive a long-term care benefit. Premiums do not rise - - since you have already paid for it. These types of policies often provide a death benefit that will pay at least what you paid for your policy. Basically, you are providing an interest free loan to the insurance company for the benefit of having long-term insurance. While this may sound appealing, the upfront cost of this insurance can easily be over $75 to $100k per person. But if you have a higher net worth, then this option can be attractive since there is a death benefit and costs do not rise. If, however, you do not have the needed money for a single payment plan, then the annual payment product may meet your needs.
When buying a policy, another decision is whether to buy an individual policy or a shared policy. If a couple buys a shared policy, each person can use the others’ benefit if the other person does not have a need. While I generally like shared policies, they may not be available if one of the participants has a history of medical conditions. If one member of the couple has some medical conditions, then two individual policies may make more sense.