While LTC insurance is generally bought with retirement in mind, it will pay out whenever the policyholder needs LTC. Often the elimination period is cumulative, so a policyholder who uses up the deductible days the first time LTC is needed will start receiving benefits immediately the next time. Before you sign, research the insurer at www.naic.org. While sorting through LTC insurance options is not easy, the unpredictability of one’s future needs makes this coverage worth investigating.
Marie Leone is senior editor of CFO.com.
Shoring Up the Future
Long term care (LTC) insurance can take many forms. One of them is even tangible. About seven years ago, Edward Reed, a retired bank executive, and his wife Joy moved into a detached 1,560 square foot cottage on the grounds of Piper Shores, a “lifecare” community built along ocean-front property in Scarborough, Maine. The definition of a lifecare community varies by state, but usually entails a contract that promises a spectrum of care services depending on a resident’s changing needs. Piper Shores is really an insurance product with a view. Along with independent living cottages and apartments, the 138-acre community also houses an upscale assisted-living facility and a nursing home.
Like other insurance products, Piper Shores is regulated by the state insurance commission. Residents must pass a physical and meet certain financial criteria, and plunk down a lump sum payment of between $160,000 and $400,000 depending on living quarters. Ninety percent of the lump sum is returned to the resident’s estate after they die.
Residents, whose average age is 79, also must be able to afford a $2,500 monthly service fee, which pays for an LTC policy, meals, housekeeping, and other expenses. Piper Shores requires residents to have assets worth double their lump sum payment as proof that they can afford the monthly fee. The monthly fee remains the same (except for an automatic bump indexed to inflation) even as residents move from, say, cottage to assisted-living to nursing home, and that predictability is a major selling point. Reed says that Piper Shores isn’t for everybody. “I don’t want to sound like an elitist, but so far, the fees have been reasonable.” —M.L.