7 Tips for Buying Long-Term Care Insurance

The policies are complicated, and timing is tricky. But they may be a sound purchase for some people.

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Consumer advocates say you should consider the following advice before buying long-term care insurance:

1. Know your needs. Research long-term care costs in your area. You can get average costs by state and metropolitan area through MetLife's survey of nursing home and assisted living facilities. Call a few facilities in your area and ask about costs, which can vary widely even within a small geographic area.

2. Cover all bases. Only consider policies that will pay for care across a range of settings: a nursing home, an assisted living facility, and home (some policies also cover adult day-care services). Even though most people would prefer to be cared for at home as long as possible, experts advise against buying "home care only" policies. They won't provide the level of care you will need if you have a massive stroke, for example.

3. Hedge against creeping costs. Even though it will substantially increase the premium, buy a policy that provides not less than 5 percent compound inflation protection. Nursing home costs are growing at least that fast.

4. Pay to delay. If you can afford to cover part of the elimination period—the length of time after a qualifying event before your coverage kicks in—you may be able to reduce your premium significantly.

5. Check assisted living provisions. The specific nursing home services covered are generally standard across different policies and companies; not so the services for assisted living facilities. Carefully review this portion of the policy to determine whether there will be additional charges, for example, for more than a certain number of hours of care, for medication management, or for more intensive care if a patient is cognitively impaired.

6. Review credentials. Only buy a policy from an established company with a high rating and experience selling this type of insurance. You can check out a company's financial stability at ratings agencies like A.M Best and confirm with your state insurance department that the insurer is licensed to do business in your state. Some states also provide information on how frequently companies raise rates and how promptly they pay claims.

7. Call for help. If you have questions about a policy or if you're trying to decide whether long-term care insurance is right for you, your local State Health Insurance Assistance Program can provide free counseling and information.

[See America's Best Nursing Homes and search for one near you.]

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health insurance
nursing homes