The Right Time to Buy Long-Term Care Insurance

The older you get, the more likely your chances are of requiring some type of long-term care assistance. And because you know that the cost of even just a few years of long-term care can easily wipe out your life savings, you're thinking about buying long-term care insurance (LTCI).

For the most part, deciding when to purchase LTCI will depend on your age and your ability to pay the premiums. Since premiums are based on your age at the time you purchase the policy, the younger you are when you purchase LTCI, the less expensive your premiums will be. However, there's a tradeoff. If you purchase LTCI early, you may be paying premiums over a long time period.

So, just when is the right time to buy an LTCI policy? Although insurance companies will write an LTCI policy for anyone between the ages of 40 and 84, most people purchase LTCI when they reach their 50s or 60s. That way, they won't end up paying significantly higher premiums because they waited too long to purchase a policy.

Should you purchase an LTCI policy?

Deciding whether you should purchase an LTCI policy depends on your individual circumstances. However, you may want to consider purchasing an LTCI policy if some of the following criteria apply:

• You are between the ages of 40 and 84

• You have significant savings and other assets that you would like to protect

• You are in good health and thus insurable

• You can afford to pay the premiums now and will be able to afford to pay the premiums in the future

LTCI policy features

The following is a list of common LTCI policy features. Some are part of the standard policy, while others are available as options and riders at an additional cost.

Coverage for skilled, intermediate, and custodial care

A choice of where care is received (e.g., private home setting, adult day-care setting, assisted-living facility, nursing home)

Trigger of benefits when activities of daily living cannot be performed independently (e.g. bathing, toileting, eating)

Guaranteed renewable provision (the policy cannot be canceled)

Inflation protection

• Waiver of premium provision (premium payments are stopped while the beneficiary receives benefits)

• "Free look" provision

• Respite care coverage

• Grace period for late payment

• Third-party notification of missed premiums