What Do I Get When I Need It?

How Much Do I Get?

When you apply for your policy, you select the benefit amount that fits your likely need.  Think of the benefit amount as the rate at which you can access your pool of money.  In the example we just discussed, the benefit amount is $5,000 a month. 

Please understand that $5,000 is just a number—the cost of long-term care, depending on your need, where you live, and the 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 that’s 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 their lifestyle if you are receiving long-term care benefits--for example, your Social Security benefit.  That income could be used to reduce the net benefit for which you should apply, and thus reduce the cost of your LTC policy.

You should discuss this decision carefully with your family and your financial advisor.  For reasons we’ll comment on later, once purchased, LTCI policies are rarely replaced or dropped, so it’s important to get it as right as reasonable at the outset.