Long-Term Care Insurance - an insurance policy commonly used to pay for home health care, assisted living, and nursing homes. Long-term care insurance was pioneered in the 1970s by GE Capital (now called Genworth) and American Express. This type of insurance has evolved over time to be more consumer friendly thanks to model legislation introduced between 2000 and 2006 by the NAIC (National Association of Insurance Commissioners).

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Why Long Term Care Insurance Is Important...

Our long term care insurance advocates tell us that the most common reason that people put so much value in long term care insurance is to avoid this nightmare scenario:

• You work hard your entire life, building assets.
• A few years of long term care needs decimate everything, leaving you in poverty with nothing to leave your children.

It's a sad story that repeats itself daily. Because Medicaid, the state-administered welfare health care program, will pay for long term care for the poor, states are encouraging citizens to invest in long term care insurance policies to protect our social system as we know it.

One common way people pay for long term care insurance is through dividends or interest income received from other investments. By allocating a portion of this residual income to LTC, it is possible to protect the entire nest egg from the risk of long term care.

Three Things Your Long-Term Care Insurance Policy Should Include

Commonly overlooked 'features' that every plan needs to have in order to be useful.

• Inflation Protection - because you may not use your policy for 20 years or more, it is imperative that the policy include either 5% compound or at a minimum 5% simple inflation protection. Ask your long term care adviser to go over this.
• 100% Home Health Care - beware of some plans that only offer 50% or 75% home health care. Keep in mind that 75% of all claims are for home health care, so this stipulation is effectively a 25% deductible for your long term care costs.
• Calendar Days Waiting Period - each long term care insurance policy has a waiting period. You want this to count with calendar days, not service days. Most insurance plans can add a rider to get calendar days.

Who Buys Long Term Care Insurance?

Long term care insurance is typically considered by people (or couples) who have assets they need to protect from the steep cost of care. Because of this, a generally accepted rule (according to the NAIC) is that people with assets between $50,000 and $3,000,000 (not including your home) should consider long term care insurance as part of their financial plan.

Folks with assets greater or less than these levels may have other options, including self-insuring themselves or using Medicaid benefits. It is not uncommon for long term care insurance premiums to range from $1,000 a year all the way up to several thousand dollars, yet millions of Americans are still considering long term care insurance which can pay benefits of as much as $965,000 for as long as 15 years (according to Genworth, 2008).

What separates the "Good" and the "Bad" Long Term Care Insurance Providers?

Because long term health care insurance may not be used for several years after it is purchased, it is important that you evaluate the company you are buying from. Several companies rate insurance companies based on their financial ratings, and you will want to review these ratings. When we provide a long term care insurance coverage comparison here at CoverageNet, we provide a financial ratings comparison between the companies as well. We suggest looking only at companies with ratings of "A" or better from A.M. Best ratings.

» Request a Personal Quote From CoverageNet.

Introducing a new way to shop for long term care insurance.

CoverageNet will shop the market for you and provide a side-by-side comparison of all quotes. Your personal quote will include the following:

• A Financial Ratings Guide that has updated ratings from AM Best, Comdex, TheStreet, Fitch, and Standard & Poor's. Company asset levels and investment profiles are also included.
• Exclusive side-by-side comparison of policy features for the various policies shown.
• Personal Quotes from multiple A-rated carriers: Genworth, John Hancock, MetLife, Allianz Life, Prudential Financial, Mutual of Omaha, and MassMutual.