Long term care insurance is different from other insurance policies such as critical illness insurance because it isn’t used when someone is diagnosed with a specific illness, but instead it is used when someone can’t perform activities of daily living such as bathing, dressing and walking themselves without regular help from a member of their family or a carer.
Most people think that this sort of insurance policy would only be used by elderly people but in fact about 40% of long term care insurance is used by those people who are still under 65. Out of those individuals who are under 65 and who have used such a policy, this would usually be if they have illnesses such as Parkinson’s Disease or early-onset dementia which can happen to those who are only in their early 50’s.
For people who are over 65 years old, about 60 per cent them will need care at some point in their lives. If you add this fact to a growing elderly population, it can be quite a worrying thought as to how to pay for care in the future. Generally, you might hope having made lifetime tax contributions, they might be covered if they need to be cared for at some stage, but with a decrease in the UK healthcare budget, this is not very likely for people who are in their thirties or early forties at the moment.
The Dilnot Commission on Funding of Care and Support report which came out in 2011, stated that the government are going to be completely revising how care in the UK will be delivered and paid for in the future, but these thoughts and ideas are not due to become concrete until about April 2016.
What things are covered by long term care insurance?
It will usually cover the following:
- home care
- assisted living care
- residential care
- nursing care or nursing homes
- specialist areas such as dementia care
- adult daycare services
- some elements of respite care
- hospice care
Are there many types of long term care insurance policies?
There are many different sorts of long term care plans. Some of these are but are not limited to:
- immediate needs annuities
- pre-funded care plans
- enhanced annuities
- equity release plans
- savings and investments
So there you have it- long term care insurance in a nutshell. it is definitlely something that we will have to think about more as the years go on.