Long term care is no longer a luxury but a necessity that needs to be taken into consideration and put in long term finance planning. Costs of long term care insurance can vary between companies since each have their own specific set of benefits and features. Yet, there are certain basic factors that remain the same in all so one can devise ways to lower the premiums and control these costs which can be a comprehensive pre-packaged one or a more specific customized plan. Debilitating illnesses can be painful and prolonged and can lead to need for long term care which can be quite expensive unless one is prepared and plans well.
Let's take a quick look at the ways to determine costs of long term care insurance:
- Duration - This is one of the key factors to determine the cost. This duration or period is the length of time for which the benefits are available to you and will be paid. It can range from a two and three years to five year benefits. Some companies have to the option of unlimited duration in which case you will be covered for a lifetime but the premiums will be higher.
- DBA - The amount that you choose for your DBA or daily benefit amount will play a major role in determining the costs of long term care insurance. The DBA is the maximum amount available for your care in any single day and range from $100 to $500 depending on the kind of policy that you choose.
- Waiting Period - Also called the deductible or the elimination period, this is basically the number of days during which you must be eligible for benefits before availing them. The costs may vary depending on how short or long this waiting period is for one.
- Inflation Protection - While most policies offer a steady premium option there are certain factors like volatile markets or inflation that can greatly affect the costs of long term care insurance. You can opt for inflation protection which keeps your premiums steady while ensuring rise in benefits over the years. There are automatic compound inflation options which offer annual increase in benefits but low premium rates are not always guaranteed.
- FPO - The FPO or the future purchase option offers policy holders an opportunity to increase their DBA or daily benefit amount every two years. The maximum lifetime benefit can also increase along with this but in both cases there will be a corresponding increase in the premium. One can enjoy greater benefits and a more comprehensive coverage but there will be no safeguarding from the inflation.
The costs of long term care insurance depend on these above factors but also on some pre-policy factors like one's age and health at the time, the insurance policy is being issued. The older one gets the higher the premium costs are therefore one should apply and get the policy in place before any long term illness affects health negatively.