When to Buy Long Term Care Insurance

by KYW's Salil Gutt

You cannot read an article on retirement planning without mention of the critical need to buy long term care insurance early. The acid test on whether this is worth doing is come time to receive benefits.

Broadly speaking, a long term care policy pays benefits in the event of sickness or dementia. Here's how that works.

For illness, a health care professional must state in writing that the patient needs help with 2 out of the 6 Activities of Daily Living, or ADL' s, for a period of 90 days for that condition. ADL's are help in getting dressed, bathed, transfers. etc.  Outside of a stroke there are relatively few criteria that meet this condition outside of very old age. That is benefits are paid when people are in their 80's and the average payout period is three years.

For dementia or Alzheimers the rules are more liberal.  Benefits will be paid immediately.

My recommendation. Buy a long term care policy early only if there is history of dementia in your family.  Otherwise, wait until you are well in your 60s or early 70s to do so.