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Long-term care insurance, for people who are in the “sweet spot” of having too much money to qualify for Medicaid and not enough money to pay privately, can be critical.  Just ask Martin Bayne, who calls himself Mr. Long Term Care. Bayne began selling long-term care insurance, bought a policy for himself and then was diagnosed with Parkinson’s disease at 45. The benefits he received, and his gratitude for having the sense to purchase a policy, led him to become an advocate. 

But before purchasing a policy, it is helpful to know what NOT to do.  The Wall Street Journal recently published an article that set out six common mistakes people make when buying long-term care insurance. 

1. Waiting too long to buy. Waiting until you are in your sixties may be too late because either you won’t qualify for health reasons or the insurance will be too costly.Each year a person in their fifties delays purchasing may raise the premium by 3 or 4 percent.
2. Buying on price alone. Check out the company’s reliability. Buying a relatively inexpensive policy will get you nowhere if the company is not going to be there when you need the benefits.
3. Overlooking shared benefits. By purchasing a rider to share benefits, a married couple can double the benefits available to them.
4. Underestimating inflation. Inflation protection is expensive (possibly adding 50 percent to the premium) but can be very helpful. You can choose from compound inflation protection (3 or 5 percent); coverage that keeps pace with the consumer price index; protection that grows at 1, 2, 3, or 4 percent a year; or new “guarantee-purchase” or “future purchase” options. Which option you choose will depend on when it is likely that benefits will be collected.
5. Failing to read the fine print. Figure out (a) whether your policy has a waiting period before the benefits kick in, (b) how the company calculates that waiting period, (c) whether you have a monthly or daily benefit, and (d) whether the policy mandates the use of “home health care” and prohibits the use of “home-care” agencies, which can be cheaper.
6. Failing to compare hybrids (long-term care coverage packaged with an annuity or life insurance policy) and conventional policies.With hybrid policies, you can pay for the entire premium up front and lock in a price for benefits while with conventional policies you lock in a stable premium. When hybrid policyholders die, if the long-term care coverage hasn’t been exhausted, the heirs receive a death benefit. But hybrids have an added layer of fees, and, unlike traditional policies, their premiums are not deductible.