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Take Charge of Your Future

Do You Have the Right Insurance?

Advice to help you determine whether a long-term care policy makes sense for you.

Why People Buy Long-Term Care Insurance

There may be a number of reasons you'd choose to purchase long-term care insurance. Perhaps you want to ensure that your family members won't have to pay for your care. Perhaps the insurance would help you remain independent in your own home for a longer period of time. Or you may decide to buy a policy because it allows you to get into the assisted living facility or nursing home of your choice. Or maybe you simply want to save your assets for your heirs.

What Type of Policy Can You Buy?

In 2009, most people bought individual policies directly from agents or insurance brokers. Companies can also sell such polices by mail and over the phone. When working with an agent or broker, find out whether he or she has had additional training in long-term care insurance (many states require it). Be sure to check with your state's insurance department to find out if the agent holds the required license to sell insurance in your state.

Meanwhile, here's a breakdown of the different kinds of policies available:

Employer-Sponsored Plans

Some employers offer group long-term care policies or make individual policies available at discounted group rates. A number of group plans don't include underwriting, which means you may not have to meet medical requirements to qualify, at least initially. Benefits are sometimes also available to family members, who must pay premiums and may need to pass medical screenings.

Typically, if you were to leave your employer or your employer stopped providing the benefit, you'd be able to keep the policy or convert it to another policy. But your benefits and costs may change.

Plans Offered by Professional Organizations

Your professional or service organizations may also offer group long-term care insurance. Just as with employer-sponsored coverage, study your options so you'll know what would happen if coverage were terminated or if you were to leave the organization.

Joint Policies

These plans let you buy one policy that covers more than one person. The pooled benefit can be used by a husband and wife, two partners, or two related adults. There is usually a total or maximum benefit that applies to everyone insured under the policy. For example, if a couple has a policy with a $100,000 maximum benefit and one person uses $40,000, the other person would have $60,000 left for his or her own services. With a joint policy, however, you run the risk of one person depleting funds that the other partner might need.

State Partnership Programs

The Partnership Program is a collaboration among a state government, a private insurance company, and state residents to link long-term care insurance with the state's Medicaid program. This type of arrangement exists or is currently under development in about 40 states. If you purchase a long-term care insurance policy that qualifies for the State Partnership Program, you can keep a specified amount of assets and still qualify for Medicaid.

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