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Is short-term care insurance a wise choice?

As we’ve discussed before, many people resist getting long-term care insurance to help cover nursing home, assisted living and home care expenses when they get older, in part because of the expense. They don’t want to pay for care they may never need, that they believe their savings, Medicare and Social Security benefits will cover or that they assume will be handled by family members. Of course, as we’ve also noted, these are all dangerous assumptions to make.

Some people are turning instead to short-term care insurance policies. While these aren’t new, they’re becoming more popular as the cost of LTC insurance rises. Further, it can be difficult for for older people and those with pre-existing conditions — even fairly common ones like arthritis and diabetes — to qualify.

Is short-term care insurance a wise alternative to a LTC policy? Let’s take a look at some of the advantages and disadvantages.

Short-term care insurance policies generally have lower premiums than LTC policies. They are also easier for older people and those with pre-existing conditions to get. It’s generally easier to get claims paid on short-term care policies than LTC ones. Further, the pricing is the same for both genders, whereas LTC policies are usually more expensive for women. Finally, for those who aren’t able to qualify for a LTC policy, a short-term care policy may be the only option.

However, a short-term policy may not pay for the care you need if you need it. They’re called “short-term” for a reason. Most pay for care for just a year or less. Further, they don’t pay for all types of care. Some pay only for home care. Others will only cover care received outside the home. Even if they cover care in a nursing home or other facility, they may not pay as much per day as a LTC policy would.

Some insurance experts point out that if you can afford a short-term care policy, you may well be able to afford care without it. If you can afford and qualify for LTC insurance, it generally offers greater benefits for a longer period.

Whatever choice you make, it’s essential to review the policy carefully before purchasing it. An insurance professional and/or your attorney can help you decipher the fine print. Any insurance policy is a waste of money if your claim is denied when you need it.

Source: Kiplinger’s Retirement Report, “Short-Term-Care Insurance Policies on the Rise,” Eleanor Laise, accessed Oct. 06, 2015

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