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Is Long-Term Care Insurance Right for You? - Planning and Paying for Long-Term Care: Part 5 - YouTube
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Hi, this is Pete Keers for
Cantissimo Senior Living.
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Cantissimo Senior Living was
created to provide housing,
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education, community, and
services to the Senior Living
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Market. We understand the
anxiety in choosing a senior
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lifestyle. We're trusted
advisers providing free
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information resources in
simple, straightforward
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language to help individuals
discover vibrant, worry-free
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lifestyles. Check us out at
CantissimoSeniorLiving.com.
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Cantissimo Senior Living -
Experience Beyond Measure. This
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video is a fifth in a series
about paying for long-term
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care. When it comes to
preparing for retirement, many
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consumers have only a vague
idea about planning for
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potential long-term care
expenses. Yet, as noted in the
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first video in this series,
well over half of Americans age
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65 or older will eventually
require some form of long-term
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care. However, the potentially
enormous costs could quickly
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exhaust one's assets. An
attractive alternative for
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managing this considerable risk
could be long-term care
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insurance, also known as LTCI.
This type of insurance pays for
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some or all costs of long-term
care. It can cover care in a
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variety of settings, in-home
healthcare, adult daycare,
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assisted living, memory care,
or transitional and permanent
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skilled nursing care. Most LTCI
policies are purchased by
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individuals or couples directly
from companies offering those
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products. Yet, even though LTCI
can reduce a significant
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financial risk, many people
perceive this form of insurance
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is too expensive. Rates vary
depending on the inflation
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factor in the contract and the
age of the policy holder. The
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contracted inflation options
allow the policy benefits to go
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up by a set percent per year.
As a consequence, the annual
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premium goes up. While no
inflation options offer the
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lowest premiums, the monetary
benefits may not be adequate
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when it comes to paying for
long-term care. The US
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inflation rate hit a 13-year
high in July 2021 at 5.4%
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after years of rates around 2%.
While economists expect rates
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to decline, adding even a modest
inflation factor to an LTCI
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policy can put premiums out of
reach for many consumers. Age
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makes a difference too. Waiting
to take out an LTCI policy can
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increase the cost even more.
For example, the American
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Association of Long-Term Care
Insurance estimates that for a
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55-year-old person who delays
taking out an LTCI policy until
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age 65, the annual premium
increases 49%. What is involved
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in shopping for LTCI? For those
who can afford it, the purchase
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decision is a complicated one
due to the complexity of the
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product. Since there are
numerous possible long-term
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care situations, many different
options can come into play for
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any given insurance policy.
Consumers need to be aware of
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these options and analyze them
carefully to ensure they obtain
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a policy providing the best
fit. Here some guidelines for
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those considering LTCI. First,
do your homework. Learn about
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LTCI. This product has many
moving parts so education about
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these various elements is
essential. For example,
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benefits may be payable only in
the specific case of a
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triggering event. Understanding
the specifics about such
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details is vital. Also, have a
clear sense of your priorities.
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Suppose there is a family
history of dementia. In this
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case, be prepared to thoroughly
review memory care coverage
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options. Next, identify and
research companies that offer
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LTCI. Each state has an agency
that regulates long-term care
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insurance companies. After
making a list of insurers,
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check with the insurance agency
in your state to make sure that
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the company has a valid
licensing status and look at
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its complaint history too.
Information about individual
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agents representing the company
is available as well. In
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addition, check on each
company's ratings from firms
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like AM Best, Standard and
Poor, and Moody's. Read
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carefully the policy summary.
Request a summary describing
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the policy's cost, benefits,
and limitations before filling
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out an application. Comparing
summaries of different policies
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can help make apples-to-apples
assessments. Ask about premium
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rate increases. Like auto and
homeowner insurance premiums,
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premiums for LTCI can increase
during the life of the policy.
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Most states require LTCI
companies to disclose premium
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rate increases made in prior
years. Consider the impact of
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potential increased premiums on
the ability to pay for the
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policy in the long run. A worst
case scenario would be needing
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to drop the policy later in
life when the risk of needing
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coverage increases. Also the
state regulator must approve
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premium rate increases on
existing policies. Check with
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the state office to see if any
rate increase requests are
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pending for the company. Next,
look at limitations required
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regarding pre-existing
conditions. Many states require
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LTCI contracts to cover
pre-existing conditions.
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However, there may be an
exclusion period before
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receiving benefits. Carefully
complete the policy
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application. Make sure to
provide all required
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information especially
regarding health. Omitting
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certain medical details may
cause the insurance to deny
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coverage. If someone else is
filling out the application,
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carefully review all documents
for accuracy. Make a copy of
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the entire application prior to
submission. Next, thoroughly
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review the policy. Once the
policy is delivered, carefully
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read it through. Make sure all
are understood. Don't hesitate
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to contact the agent with
questions. Most states
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stipulate a right-to-examine
period, during which a full-run
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refund can be obtained for any
reason. Feel free to use the
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entire right-to-examine period.
Don't allow anyone to rush a
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signing before the period is
over. Pay the insurance
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company. Fees should be payable
to the insurance company and
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no one else. For example, being
asked to write a check to the
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agent or an unrelated third
party is a red flag. Next,
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inform those close to you.
Identify the people who need to
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know about the policy. For
example, a spouse or adult
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child would need to know about
the policy provisions to
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provide a sounding board before
signing. Once the policy is in
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force, these same people need
to know when policy benefits
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and limitations are and how
they apply and how to
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communicate with the insurance
company on your behalf. These
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are also the people the
insurance company can contact
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if a premium is overdue. Finally,
don't go it alone. Over all,
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consult with a trusted
financial professional who
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knows your situation. This
person's feedback can add
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essential perspective to the
decision-making process. Long-
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term care insurance can provide
a great way to reduce financial
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risk. However, complex product
alternatives require a thorough
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analysis so the consumer can
make the best choice. This is
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Pete Keers for Cantissimo
Senior Living. Talk to you next
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time.
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