Dear Harry: We're in our late 50s, and until now never thought seriously about long-term care insurance. My wife's sister, who is now 71, has a rather rare chronic condition that makes it impossible for her to live with her daughter or us. Fortunately, she has LTC insurance that gives her the opportunity to live in a decent facility with little outside help to cover the cost. This woke us up with a bang, and we're now looking carefully with two agents. They are promoting quite similar policies from very strong companies. What should we be looking for, and what should we avoid?
What Harry says: My vote is to look for a policy that has a wide area of coverage. It should go beyond nursing care to include home-health care, custodial care and skilled-nursing care. Pre-existing conditions should not exclude coverage. You want a policy that is guaranteed renewable so you can't be denied renewal at a crucial time. There are a number of things that will affect your premium. How long can you wait before the policy kicks in? Consider a minimum of 30 days and a maximum of 90 days. How long do you want to be covered? Lifetime coverage is quite expensive and rarely needed. Keep in mind that the vast majority of folks who enter a nursing home are gone within six years. The amount of coverage should ideally be enough to provide for the gap between half your income and $300 a day. And be sure that there's inflation protection. It is also wise to have a "waiver of premium" provision that eliminates premiums during the disability period. Here's hoping you'll never need to be a beneficiary.