The Cost of Waiting

https://www.kimsnider.com

You know long-term care insurance plays a pivotal role in protecting your assets and insuring one of the biggest financial risks you face. But who wants to go through the effort involved in purchasing a policy?

And how many of us really want to pay an insurance premium? My guess is that none of you are raising your hand and saying, "Me, me!! I want to!"

Insurance is like going to the dentist - no one wants to go, but we all know we should do it. There's a price to pay if you avoid the dentist; you increase your chances of getting cavities, gum disease, and an unfortunate case of halitosis.

There's also a price involved if you delay the purchase of long-term care insurance. Let's look at the reasons you'll pay more in the future than you would today:

● You're not getting any younger. In fact, we're all getting older. Because long-term care insurance premiums are based on your age at the time of purchase, you'll pay slightly higher premiums for each birthday that passes while you wait to buy long-term care coverage.

● Plans get more expensive over time. More than likely, the exact same plan will cost more next year than it does now. To keep up with rising healthcare costs, insurance companies must increase their initial premiums on a regular basis.* Additionally, companies change and update their plans every couple of years and the rates for the new plans are typically higher. *This does not mean your rate as an existing policy holder will also increase. To learn more, read Will My Long-Term Care Premiums Go Up as I Get Older?

● You'll need to buy more coverage. The rule of thumb is that you choose your policy's benefit amount based on the current cost of care. Because long-term care costs are increasing, you will need to buy more insurance coverage in the future than you will today. For example, in 2010 the national median rate for a private nursing home room is $75,190. In 2011 that price is likely to be almost $79,000. The additional amount of needed coverage will only cost slightly more, but over time, it can have a significant impact on how much you will pay.

● Your rate class or insurability may change. Your rate class is important because it determines what your premium will be. Most long-term care insurance companies offer a preferred rate discount. Unfortunately, your health is not guaranteed. You are one doctor's appointment, one illness, or one accident away from increasing your premium or becoming uninsurable.

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Education

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