Some Factors to Consider in Buying Long-Term Care Insurance

The insurance company 
The financial strength of the insurance company is always an important factor. This is particularly so with long-term care insurance, because of the long time before coverage might be needed. 

The cost 
Long-term care insurance is not cheap. Any ethical sales agent should help assess whether a client can afford it over the long haul. The key to an affordable rate is buying the insurance when you are in your 40s or 50s, or at least no older than 65. The increase in premium as one moves from 45 to 55, and then to age 65 and beyond, is dramatic. 

There are so many variables involved in the cost of a long-term care policy that it is difficult to generalize. Here are some typical situations, with strictly "ball park" estimates: 

• A typical long-term care policy including inflation protection and a 90-day waiting period can cost a 65-year-old around $1,500–$2,000 a year for two or three years of $100-per-day coverage, including both nursing home and home care. A 75-year-old might pay over $3,000 for the same coverage. For top-notch lifetime coverage, those premiums might double or triple. The 45-to-55-year-old purchaser, however, can probably buy the same policy for a fraction of that cost. 
• The six "activities of daily living" (described here) serve as benefit triggers. But they have no precise, universal definitions. The definitions given in individual policies vary and therefore should be examined closely. Likewise, look closely at the definition of "cognitive impairment," which is another benefit trigger. Therefore, the more broadly defined that condition is, the better. 
• Any policy you are considering should include an option to purchase an inflation protection rider that will increase your initial daily benefit to match inflation over the years. Because the cost of care is likely to become significantly higher in the years until you make a claim, most experts advise anyone under 75 to include inflation protection. 

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