When is the Right Time to Buy Long-Term Care Insurance? An Expert’s Advice
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Kevin Wenke
- Published
As a financial planner specializing in long-term care insurance, I’ve seen firsthand the impact of timing on the cost and benefits of these policies. Trying to figure out the right time to buy long-term care insurance is a confusing financial planning decision, one that could significantly affect your future comfort, security and lifestyle.
You may be asking yourself:
“Should I buy long-term care insurance now when I’m younger..?”
“Should I wait until I’m older..?”
or maybe even
“Should I even buy it at all and instead save my money and hope I never need long-term care services?“
In this article, I am going to take you through part of the process I use with my clients to help them understand when, and IF they should be concerned about buying long-term care coverage at this point of their life with the goal of helping you go through the process yourself to gain clarity.
First Question: What other areas of your financial life demand your attention?
As a financial planner, I have to tell you the best time to buy LTC coverage is NOW! You never know when you could have a claim or become uninsurable…
I am sure you know that but you’re probably here because your are trying to figure out if you should wait and make the commitment later on in life.
You probably have other goals or activities you want to do with your money.
You don’t have unlimited resources and the decision of whether or not to buy long-term care insurance coverage today or even in the future is just one of thousands of financial decisions on your plate that demand your attention and will need your money.
Since you are here reading this article, I know you realize long-term care planning is important and you would like to buy a long-term care policy right now BUT you’re wondering if there are better places to put your money so you can build the future life you really want. Hopefully, you will never need long-term care. Some people don’t and if you never do, I would say you’ll be blessed. Unfortunately, there isn’t a crystal ball that tells us your future.
Therefore, you might need long-term care services one day, so let’s figure out when the best time for you to buy coverage is and maybe even more importantly, how you are going to buy it.
I know this is a difficult topic to think about. Many people don’t start thinking about long-term care until after one of several things happen…
Maybe they had an experience where they took care of a loved one who didn’t have a long-term care plan in place and they felt the stress it created for everyone involved: The loved one, the family and themselves. Having lived through that experience, they start the process of trying to figure out when and how to buy long-term care insurance, so they aren’t ever the source of their families struggles if they ever need care…
Others start to look at when to buy long-term care after they observed how horrible care can be for someone forced into a state Medicaid long-term care facility. I wish it was better, and I am sure the caretakers in those facilities do too, but the funding is minimal and the level of care shows. You are wondering when you should buy long-term care insurance to avoid being forced into that kind of situation.
Maybe you saw someone young need long-term care after an accident or illness and realized it isn’t necessarily a coverage reserved for older people.
Whatever the reason for you being here reading my article is, know that it really is just one of many financial decisions you need to make. Some of the others include:
- Budgeting for Daily Living Expenses: Should you ensure your regular expenses are covered before allocating funds to long-term care insurance. This will help you determine how much you can afford to spend on premiums with minimal impact on your current or future lifestyle.
- Current Debts and Obligations: Evaluate your current financial obligations, such as loans and mortgages, to assess how they might impact your ability to afford long-term care insurance premiums today and in the future.
- Other Insurance Needs: Consider how long-term care insurance fits into your broader insurance portfolio, including health, life, and disability insurance, to ensure comprehensive coverage.
- Wealth Building Goals: Align your long-term care insurance purchase with your wealth-building goals. For example, my SALLO™ Strategy provides you with Long-Term Care Coverage while helping you create wealth in the stock market. (As a matter of fact, it can help you build wealth faster in the stock market and protect your portfolio from stock market crashes. More on that later.)
I know there is a temptation to call insurance agents and see which one will give you the best quote for a long-term care policy. This can be a mistake for a couple of reasons.
First, long-term care policies have detailed definitions about when and how they pay. Therefore, cheaper isn’t always better.
Secondly, when you see the required premium to get coverage, you may get sticker shock and do nothing. When I worked at MetLife, I can’t tell you how many of my co-workers told me about people who saw the premium to get coverage and did nothing! Long-term care was expensive 15 years ago and it is even more expensive today…
Therefore, from my experience, I find the better strategy for figuring out when to buy long-term care coverage is to it as part of your comprehensive financial plan. This way, you can see how to coordinate all the aspects of your financial life together, so they are integrated together providing you with efficiency. ‘Do more with what you have.”
A good process will help you understand the choices you have available and the sacrifices you may need to make. It should be able to lay out where you are wasting money that provides you with little if any benefit so you can stop wasting your money in those areas and reallocate your resources to provide more impact on your future.
This insight can help you increase the money available to you. Since now the best time for you to get long-term care coverage, this can help you buy it and put it behind you so you can address other needs and wants you have.
Second Question: How Does Your Health, Age, and Lifestyle Impact Your Ability to Buy Long-Term Care Insurance Coverage
Your health, age and lifestyle plays a significant roll into a long-term care policies cost and even whether or not you can even get a policy.
You will never be younger than you are right now and with few exceptions, you are likely in the best health you will ever be right now too.
It is just a fact of life as we get older, things on our bodies stop working as good and breaking down.
I know at the gym I can do only half of what I was able to do just a few years ago. It frustrates me but, I keep trying…
Your health and age is an easy argument for making today the best time to buy a long-term care insurance policy, if you have the means to do so. Let’s take a deeper look…
1. The Role of Health in Eligibility and Pricing
Your health status at the time of application is a crucial factor in determining your eligibility for long-term care insurance and the premiums you will pay.
Generally, the healthier you are, the lower your premiums will be. For example, if you are a non-smoker with no chronic health conditions and a normal body mass index (BMI), you are likely to qualify for lower premium rates.
Conversely, if you have high blood pressure, diabetes, or other health issues, you may face higher premiums. Insurance companies assess your health through medical exams and your medical history to determine your risk level.
If you wait to buy long-term care insurance and your health deteriorates, you could end up paying significantly higher premiums or even be denied coverage.
2. Pre-Existing Conditions and Insurance Options
If you have pre-existing conditions when you apply for a new policy, it’s important to understand how they might affect your coverage options and premiums.
Pre-existing conditions are health issues that existed before applying for insurance. Depending on the severity and nature of the condition, insurers may charge higher premiums or exclude coverage for specific conditions.
For example, if you have a history of heart disease, you might face higher premiums or limitations on coverage related to heart-related long-term care.
In some cases, insurers may offer coverage with a waiting period before benefits related to the pre-existing condition can be claimed. It’s crucial to disclose all pre-existing conditions when applying for insurance to avoid issues with future claims.
If you don’t have any pre-existing conditions today, that luxury isn’t guaranteed to be the same in the future making now the best time to get long-term care coverage.
3. Health Changes and Policy Adjustments
Be aware that changes in your health can affect your policy, including premium adjustments and eligibility for future coverage. If your health deteriorates after purchasing a policy, you may not face immediate premium increases, but it could affect your ability to purchase additional coverage or modify your existing policy.
For instance, if you develop a chronic condition like diabetes, you might find it more challenging to increase your benefit amount or extend your coverage period.
On the other hand, if you improve your health, such as by losing weight or quitting smoking, you may be eligible for premium discounts or better coverage options. In this case, you can replace any existing policies you own when you improve your health. As long as they are available, insurance companies will give you this option.
If you can’t get a new policy for a lower rate, it is because their costs have changed for any new policies issued or, worst yet, there aren’t any new policies available! The fact that this is an option and there are variables that could only make your options worse still makes NOW the best time to address your potential long-term care needs.
4. Personal Risk Factors for Needing Long-Term Care
Assessing your personal risk factors, such as lifestyle and family health history, is essential to gauge your potential need for long-term care.
Factors such as a sedentary lifestyle, poor diet, and smoking can increase your risk of developing chronic conditions that may require long-term care in the future. For example, a smoker might pay premiums that are 20-40% higher than those for a non-smoker due to the increased risk of health issues.
Additionally, if you have a family history of Alzheimer’s disease or other cognitive disorders, you may be at a higher risk of needing long-term care, which could influence your decision to purchase insurance earlier.
5. Family History and Genetic Considerations
A family history of chronic diseases or conditions that require long-term care can increase your likelihood of needing such services.
If your parents or siblings have had conditions like Alzheimer’s, Parkinson’s, or other degenerative diseases, your risk of needing long-term care increases.
Insurance companies may consider your family medical history when determining your premiums and eligibility. In some cases, they may require higher premiums or impose coverage limitations based on your genetic predisposition to certain conditions.
6. Lifestyle Choices and Long-Term Care Risks
Your lifestyle choices, such as diet, exercise, smoking habits, and activities can significantly influence your risk of needing long-term care.
A healthy lifestyle with regular exercise, a balanced diet, and avoidance of smoking and excessive alcohol consumption can reduce your risk of chronic diseases and, consequently, your need for long-term care.
Conversely, poor lifestyle choices can increase your risk of developing conditions like heart disease, diabetes, and obesity, which may lead to a higher likelihood of requiring long-term care services.
How about the type of activities you participate in?
One of my former employees from my cell phone stores, only 26-years old at the time, was in an awful motorcycle wreck in 2007. He required 2 years of rehabilitation. He couldn’t walk, he couldn’t go to the bathroom by himself, he couldn’t get dressed and he couldn’t get out of bed…For six months! At 26, he could have benefited from having long-term care coverage.
Insurers may use lifestyle factors to assess your risk and determine your premiums, with healthier individuals and individuals who don’t participate in risky activities often qualifying for lower rates.
Conclusion - The Best Time to Buy Long-Term Care Insurance is NOW!
Yes, Now is always the best time to buy any insurance coverage. Insurance companies are fickle. They have the power to decline or accept you. In addition, if you develop a condition that results in you needing long-term care services, you have to have coverage before you condition occurs to have a policy and have the insurance company help you pay your bills.
Still, the question is how can you buy coverage and juggle all of the other areas of your financial life so you aren’t “insurance poor.”
I mentioned the best way to understand how to make understand your choices is to work with a competent financial planner so you can understand how all aspects of your financial life work together. I do that inside my “Financial Freedom Process™” which you can check out here.
Or, if you aren’t ready to make a financial commitment to work with my team and I, there is also my free guide that discusses a little known strategy I don’t believe any insurance agents or investment advisors are using. I have a free guide I wrote that explains how it works (and tells you why no one else is promoting it) and you can download that for free by clicking here too.
I hope this article served you regardless and has helped you understand why NOW is always the best time to buy insurance but also how to prioritize the financial decisions you have in your life.
I hope this article served you regardless and has helped you understand why NOW is always the best time to buy insurance but also how to prioritize the financial decisions you have in your life.
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The information provided on this website is for educational and informational purposes only and is not intended as financial, investment, or legal advice. Kevin Wenke, CFP, CLU, and his companies, Decision Tree Financial and Decision Tree Investment Advisors LLC, do not guarantee the accuracy or completeness of the information presented. No client-advisor relationship is established by the use of this website or interaction with its content.
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