Tips On Reducing Long Term Care Insurance Costs

While it is always best to have complete coverage (inflation protection, lifetime coverage, at least $100/day benefit), it is better to have a basic policy than to have none at all.  A minimum policy is better than being uncovered for the high cost of long- term care.

Here are five ways to help you reduce costs and yet provide basic coverage:

Reduce the Coverage Period
For example, reduce the term of the policy from 4 years to 3 years.  Savings can be significant and a 3-year policy covers 72% of the cases of long-term care.

Reduce the Daily Benefit
The average daily rate in 2004 for a private room in a nursing home was $192, an increase of 6% from 2003.  If you cover just $100 per day with insurance, you can make up the difference with other income sources, such as Social Security or interest income. (Source: 2004 MetLife Market Survey of Nursing Home & Home Care Costs)

For Ages 75 and Older
Consider omitting the inflation protection.  If you are likely to need long-term care it will be within 10 years, by age 85.  The need for protection against the costs of inflation is not as great as it would be for someone younger.

Consider Partial Home Care Coverage
Many companies offer, as an example, $100/day benefit for nursing home payments and $50/day for home care payments.  By reducing the benefits of home care, you can lower your premium.

Eliminate Home Care Insurance
Many people have a spouse or friends or relatives who can assist them in the house.  Hired home aides are relatively inexpensive (averaging $18.12 per hour).  Care at home may easily be covered within the means of your own income.  The most important coverage to obtain is for care outside of the home. (Source:  MetLife Market Survey of Nursing Home and Home Care Costs, August 2003).