About Long Term Care Plans
Long-term care is when a person needs someone to care for them because they cannot manage a number of daily living activities on their own any longer and it is envisaged that this will happen for the foreseeable future. It comprises of help with daily living activities such as washing, dressing or eating and can take place in the home or in a residential or nursing care home.
The need for care can occur instantly without warning, such as the result of a stroke or heart condition. On the other hand the need for care could evolve progressively as the person’s dependency increases due to lack of mobility or dementia.
What is long term care insurance and what does it do? Long term care insurance is a way of insuring against the costs involved in paying for long term care. It is another name for an immediate needs annuity which, once in place, produces a monthly payment to a registered care provider for the rest of a person’s life.
The way a long term care insurance works is that those who die too soon effectively pay for those who live longer. One insurance company guarantees a full refund if the person dies within the first 30 days and this progressively reduces over the first six months to zero death benefit. it is possible to buy extended protection against dying in the short term, but the protection is very limited and costly.
The purchase price of a care plan is based on the applicant’s life expectancy. Insurance companies take into account gender, age and medical condition by requesting a report from the persons G.P. Also they usually contact the care provider direct by telephone. If an individual’s life expectancy is deemed to be lower to chronic medical ailments, the price of the plan will be lower.
The lump sum premium is calculated by taking the shortfall between the income coming in and the cost of the care fees going out. The resulting shortfall can be accommodated by payment of a single premium to an insurance company. Automatic indexation or escalation of benefits can be included to cover annual care fee increases.
Why not suggest to the care home that they could agree to fixed 5% fee increases annually? In this way the care plan can be arranged to match these rises every year.
Obviously, if the care costs rise above the level of insurance payments, there could be a further shortfall. But to all intents and purposes, this is usually manageable from other savings, unless the level of care required has altered drastically. In this case, a further review of the situation should be done before parting with more funds. For example, the care needs may have escalated to the point of the person becoming eligible for free personal care known as continuing care.
Long term care plans have a significant tax saving benefit. This is because there is no tax liability on the person in care when benefits are payable direct to a registered care provider.
before to commence planning for long term care payments make certain to access Barbara Davies’s essential free report about long term care insurance policies.