*This is a guest post*
Life is unpredictable. While you might be doing great health wise, the next day you might find out that you have a chronic illness. Although this often happens to people in the late years of their lives, it often leads to the need for assisted living. And with this comes bills that mount up. The alternative would be to involve your family members and friends in helping you do every day tasks such as showering, cooking and even moving around. However, this isn’t always possible.
Unfortunately, 97% of people will require long-term care during their lifetime, according to an article on Forbes. While applying for long-term care insurance seems like the best ways to protect yourself from this uncertainty, there is the dilemma about the best time to pay. Pay early, and you pay premiums for too long. Pay late, and you might have a slim chance of getting accepted or even end up paying costly premiums.
Here is a guide for determining the best time to pay for insurance:
The Cost of Assisted Living
On average, assisted living will cost you $119 per day in 2018, according to assistedliving.org. Well, your ability to offset the required cost will depend on the end of the wealth spectrum that you lie on. In case you have enough assets and a job that pays well, then it will be no problem paying up this cost without having to settle for insurance.
If you are on the other end of the spectrum, then policies like Medicaid will help in offsetting some of the costs once you need assisted living. However, this changes if you belong to the middle class. Paying attention to insurance periods such as the open enrollment 2019 can be wise depending on your age.
The Cost Increases With Age
Insurance work in a way that the healthy people that have paid for the policies help to pay for the people who are sick while they, at the same time, help in mitigating the financial burden when the healthy get sick. This is the only way insurance can be sustainable. As a result, insurance companies tend to offer lower premium payments to young people.
The chances are that it will take a thirty-year-old longer to need assisted living than it would take a 65-year-old senior citizen. As a result, applying later in life will earn you a higher payment premium as you have a higher risk of needing assisted living.
The Flip Side of Applying Early
Applying for long-term care insurance at a young age is best done if your family has a history of chronic diseases such as Alzheimer’s. Since you have a high chance of needing assisted living, this will help reduce the amount you pay out in the form of premiums while reducing the unpredictable financial burden. In any other situation, applying too early might be unwise.
What if you apply in your mid-thirties only to never need any assisted living? This investment will most likely go to waste. In most cases, insurance companies will suggest applying for the insurance policy in your mid-50s in case you haven’t experienced any health issues to this time.
Pay Attention to Inflation
In case you choose to invest in long-term care insurance at the age of 50, you might have to pay up the premium for about 20 years before you get to file a claim. Given that inflation is inevitable, the amount of coverage you get won’t be worth as much then as it is today. Luckily, there are policies that cater to that through inflation protection. While you will have to pay a little bit extra, it will be worth it in case you ever need the coverage.
Insurance is like a cushion to protect you from an ever-uncertain future. However, you should be cautious when trying to make the decision on the best time to apply for a policy to get the most bang for your buck. Consider the aspects above to make the right choice.
Thank you for reading.