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McHugh & Macri
Certified Elder Law Attorneys Serving New Jersey Residents since 1978.
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Benefits of buying long-term-care insurance

NAELA National Academy of Elder Law Attorneys, Inc. MEMBER

Financial planners have long encouraged the purchase of long-term care for their clients in New Jersey and across the nation while they are still fairly healthy. While purchasing coverage through work is usually the most cost-effective option, people can obtain individual plans reasonably if they buy them when they are in good health. However, buying individual coverage has become increasingly expensive.

One 70-year-old woman decided she needed long-term care insurance after she was diagnosed with an illness. Although she could only find one plan due to her health issues, she purchased it because she knew that she wouldn't be able to afford expensive medical costs without it. The woman, now 85, lives in a long-term care facility and has been receiving benefits since 2010.

Her son, 50, learned from his mother's experience and purchased a plan through work. He has seen the benefits she received from having this type of medical plan. One financial planner explained that about 70 percent of people older than 65 will use some type of assisted-living services.

Three major providers in the industry have quit selling individual plans because they were no longer cost-effective. Poor planning on the part of the underwriters' forecasts failed to account for increased care expenses and reduced interests rates. In addition, clients didn't let their policies lapse as expected, which meant the insurers paid out more money than they thought they would. This means that rates on new policies are increasing and qualifying for a policy has become tougher than ever. Someone in good health in their 50s could pay about $2,000 annually for a plan.

When budgeting for long-term care insurance, people need to begin planning in their 50s when they are healthy. An elder care attorney might be able to help clients find a plan that meets their needs.

Source: CNBC, "Planning for long-term care can have a big payout", Bertha Coombs, August 01, 2013

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