With retirement looming on the horizon, ensuring you can afford the care you may require is of utmost importance. Long-term care insurance is likely something you’ve considered, but one question remains: Should you enroll in a policy before retirement?
In short, the answer is a resounding “yes.” There are several compelling reasons to secure long-term care insurance before you retire, and these reasons primarily center around accessibility and affordability.
Take a look at your long-term care insurance options now.
Why You Should Buy Long-Term Care Insurance Before You Retire There are several compelling reasons to enroll in a long-term care insurance policy before you retire, including:
1. Improved Qualification Odds for Long-Term Care Insurance Similar to other insurance products, you must meet specific qualification requirements to purchase a long-term care insurance policy. What’s more, it’s generally easier to fulfill these requirements before retiring.
“Chronic conditions, injuries, cognitive issues, and the like” can render you ineligible for coverage “from an underwriting standpoint,” notes Tom West, Founder and CEO of Lifecare Affordability Plan.
These issues tend to be more prevalent as you age. Consequently, applying for long-term care insurance before retirement, while you’re still in good health, offers you the best chance of qualifying for coverage.
2. Rates Only Tend to Increase Insurance companies set premiums for insurance policies based on the level of risk the insured individual poses to the company. The higher the risk, the more expensive the insurance policy premiums become, assuming the insurer even provides coverage. Long-term care insurance operates by the same principle.
When evaluating eligibility for a long-term care insurance policy, the company takes into consideration answers to questions such as:
- What are the chances you will require long-term care?
- How long is it likely that the insurance company will collect premiums before you need long-term care?
- Are there any factors that might accelerate your need for long-term care?
In general, insuring you becomes riskier once you retire. If you are still in the working age bracket, there is a higher likelihood that you may need long-term care immediately, and you’re more likely to be insured for a longer period before that need arises.
However, the price you pay for long-term care insurance will likely increase as the years go by. By obtaining your coverage now, you’ll likely lock in the lowest rate you’ll ever encounter.
3. Easier to Make Adjustments Before Fixed Income Kicks In In all likelihood, you’ll be living on a fixed income in retirement, which may make affording a new insurance policy more challenging than you think. Purchasing long-term care insurance before retirement helps in two key ways:
- Planning: Obtaining coverage now allows you to know precisely how much money you need to allocate for monthly premiums.
- Cost: During retirement and on a fixed income, you’ll want to minimize your costs. Enrolling in a policy sooner results in lower premiums, ensuring you can afford your premiums in retirement.
Lock in your long-term care insurance premiums now.
The Bottom Line Ultimately, there’s approximately a 70% chance you’ll require long-term care during your post-65 years. However, long-term care is costly, and without a plan to finance it, it could present challenges down the road. Thus, it’s generally advisable to purchase a long-term care insurance policy while you’re still in the workforce. Waiting until retirement may jeopardize your ability to access meaningful coverage at an affordable rate.