When you enter retirement, you often want to reduce your financial risk while keeping your expenses in check so you don’t run out of money. One way to potentially get lower risk and lower costs is to buy long term care insuranceconsidering that nearly 70% of people over 65 need some form of long-term care for an average of three years, according to the US Department of Health & Human Services (HHS).
Because Medicare and traditional health insurance do not cover many forms of long-term care, such as home health aides or assisted living facilities, have long-term care insurance in your 70s can help defray those costs. It can also help keep you from being dependent on unpaid family support, which can drain you financially.
“As with all insurance, the younger and healthier you are when you buy it will come with lower premiums and more coverage options. The ideal age to buy long-term care insurance is 60, but if you’re still healthy when you’re 70 -75, can still buy a policy for a higher premium,” said Chris Orestis, president of Retirement Genius.
Find the best long-term care coverage option for you.
Buying long-term care insurance in your 70s? Do this to keep costs down, experts say
That said, there are steps you can take to reduce costs when purchasing long-term care insurance in your 70s. These include the following:
Reduce the duration of benefits
Unlike health insurance, which typically has policy limits that renew annually, long-term care insurance policies instead provide coverage for several years when a qualifying event occurs. So, choosing less coverage can lower the price of long-term care insurance.
“I will start with reducing the benefits of coverage for a period of four years since this will cover the average length of care needed for most seniors,” says Eleanor I. Johnson, founding principal at Highland Capital Brokerage.
As he points out, the average length of long-term care needed for men is 2.2 years and 3.7 years for women, according to HHS, so a four-year benefit would be enough for most people.
Learn more about how the right long-term care insurance policy can benefit you here.
Choose a longer elimination period
Long-term care insurance policies typically have an elimination period, which is the time between when a qualifying event occurs and when coverage begins. And the elimination period you choose can affect your rates.
For example, “instead of choosing to initially benefit from a 90-day elimination, a 180-day elimination will reduce costs,” says Allen Haney, founder and president of The Haney Company.
Reduce benefits
Even if you want a higher benefit to reduce your financial risk, a lower benefit amount can help long-term care insurance costs.
“The cost for $2,000 per month, or the amount of daily benefits that is appropriate, is about half of the cost of a policy with coverage of $4,000 per month,” said John Hearn, market president of The Benefit Company, an IMA Financial Group company.
Extra limits
Long-term care insurance coverage may vary based on the specifics you choose when completing your long-term care insurance application, but may not include the various add-ons or add-ons above the basic policy.
“Many long-term care policies offer inflation options and other bells and whistles that increase premiums for the plan. Removing some of these non-essential riders to make the plan affordable is better than having no coverage at all,” said Hearn.
For example, “paying to increase the annual cost of living after 70 may not be as valuable,” said Haney.
Choose a hybrid policy
Finally, consider insurance options other than standard long-term care insurance.
If you’re healthy, consider buying a hybrid life insurance/long-term care insurance policy, or sign up for an annuity with long-term care travel, which can pay you tax-free income if you can’t keep up with both. or more daily activities (ADLs, long-term care insurance coverage standards), said Orestis.
Although a combined policy can cost more than one standard, you can get more value from the plan, and you can save money if you are planning to buy separately.
Bottom line
When long term care insurance costs tend to get more expensive in your 70s, it’s still possible worth it to ask for wisdom, assuming you meet long-term care insurance eligibility requirements, which generally means in relatively healthy. From there, you can adjust different policy levers such as benefit amount, benefit duration, and elimination period to reduce costs, along with alternative coverage options.