What Do I Get When I Need It?

How Much Do I Need?

Our focus is on long-term care benefits and the products available today to deliver them to you. Whether you decide to use a traditional or a hybrid policy, one providing a pure monthly benefit for such care or the other providing a monthly long-term care benefit and some level of a life insurance benefit, when you apply for your policy you’ll select a long-term care benefit amount that fits your anticipated future need.

Think of the benefit amount as the rate at which you can access your pool of money. In the example we discussed in What Am I Buying?, the benefit was $5,000 a month. Please understand that $5,000 is just a number—the cost of long-term care, depending on your needs, where you live, and the care provider you select may well, and in the future certainly will, exceed that amount.

If you needed long-term care today, would $5,000 a month be sufficient? Figuring out that need and cost requires a working crystal ball—how can you know now what the cost of care will be in the future or what sort of care you may need or for how long? You can’t.

What you can do, and what we’re all about here, is to consider what you do know—your current financial circumstances, your conservatively projected future financial resources and obligations, and the simple facts that neither your health care insurance nor Medicare covers chronic long-term care needs, nor does Medicaid (without reducing your assets to a poverty level and then controlling the delivery of care to you.)

Considering what you do know, your analysis of your needs and resources may show, for example, that you have income that your partner will not need to maintain her or his lifestyle if you are receiving long-term care benefits—for example, your Social Security benefit. That amount could be used to reduce the net monthly LTC benefit for which you should apply, and thus reduce the current cost of your LTC policy. The same concept applies whether you’re considering a traditional or hybrid product.

You should discuss this decision carefully with your family and financial advisor. Once purchased, LTCI policies are rarely replaced or dropped, so it’s important to get it as right as reasonable at the outset.