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As more people are relying on Long-Term Care Services, now is the time to take action with an Insurance Plan

November 17, 2010  -- More than ever, Americans are facing the tough financial challenge of caring for their children as well as aging relatives, while trying to ensure that they have enough saved for their own future well-being. Coupled with the rising cost of long-term care services, the need for proper financial planning is all the more apparent.

According to the nonprofit LIFE Foundation, that is where long-term care insurance plays a critical role. It helps people secure their financial futures by providing funds to help pay for the kinds of long-term care services they will need and prefer.

"Despite reports from the federal government that 70 percent of individuals over age 65 will require some long-term care services during their lifetime, most Americans do not have a realistic financial plan in place to pay for the care they are likely to need," said Deb Newman, CLU, ChFC, LTCP, president of Newman Long Term Care and a LIFE Foundation Board Member.

"Health insurance and Medicare generally only cover the cost of doctor and hospital bills, where long-term care insurance pays for a wide range of services, such as nursing home or at-home care. There are a number of options available today to help people design a plan to meet their needs and budget."

In support of Long-Term Care Insurance Awareness Month in November, the nonprofit LIFE Foundation outlines three types of long-term care insurance policies to help educate consumers about the options available to them:

• Traditional Long-Term Care Insurance – Premiums for a traditional long-term care insurance policy will vary depending on a number of factors, such as the applicant's age and health, the daily or monthly benefit, the maximum benefit, the waiting period (similar to a deductible) and the inflation benefit. For example, a policy that pays $6,000 a month for up to five years of long-term care will cost more than a policy that pays $3,000 a month for three years. Working with a professional insurance advisor, a person can select the right combination of options to meet their specific needs and budget.
• Hybrid Insurance Products – Some permanent life insurance and annuity products offer an option that links to a long-term care insurance policy. A person pays a lump sum, one-time premium for a pool of funds that can either provide coverage for long-term care services or, if long-term care is never needed, act as a death benefit for their heirs. For example, a person might pay a lump sum premium of $100,000 to reserve either $600,000 in coverage for long-term care services or provide a death benefit of $200,000. Some policies also offer people the option to receive a percentage of the original death benefit amount – for example, 10 percent of the $200,000 – even if they use the policy to cover long-term care services.
• Shared Risk Long-Term Care Insurance Products – Several companies have recently announced long-term care insurance options that help simplify the buying process by allowing a policyholder to choose either a daily or lifetime maximum benefit. When care is needed, the insurance policy covers 80 percent of the cost of care until the maximum benefit is reached and the remaining 20 percent is paid for out-of-pocket by the policyholder. Since risk is shared between the insurer and the policyholder, the cost of these policies can often be lower than a comparable traditional insurance policy.

The LIFE Foundation recommends people educate themselves about their need for long-term care services and meet with a qualified insurance professional specializing in long-term care insurance to help guide them through the buying process. For more information about long-term care insurance and for additional purchasing tips, please visit: http://lifehappens.org/longterm.

About LIFE

The Life and Health Insurance Foundation for Education (LIFE) was founded in 1994 in response to the public's growing need for information and education on life, health, disability and long-term care insurance. LIFE also seeks to remind people of the important role insurance professionals perform in helping families, businesses and individuals find the insurance products that best fit their needs. To learn more about these topics, please visit www.lifehappens.org.