The IRDA is formulating guidelines for a long-term care insurance policy (LTC insurance) It is not about hospitalization or treatment, but about the things we take for granted every day, such as going to the bathroom, getting medicines from a shop, or getting dressed. These become painful tasks when we are old or disabled. You may need care at home, in your community, or at an assisted living facility. All this costs money.
What is Long-Term Care Insurance?
Life insurance takes care of life’s critical moments, from special occasions to death. You invest in an insurance policy which helps you when there is death or illness. Term insurance is a popular policy for these needs. As India’s healthcare improves, the demographic is also changing and so also we need changes in the insurance products we get. With children in far off places, people face the challenges of old age alone. Insurance companies must adapt and change to cater to the new needs of India. In many countries, long-term care insurance is already in place to help old people with the problems of day-to-day living.
Who needs it?
We have a large number of aging people to care for. The joint family is fading away as the nuclear family takes its place. As muscles weaken, old people face the daunting task of taking care of themselves in old age. The daily grind of living, maintaining their health, and nursing seems uphill to parents living alone. There is an urgent need for help from caregivers as people age and lose the ability to care for themselves. Assisted living is expensive. Term insurance does not cover these basic needs.
So also people with disabilities need help on a day-to-day basis. Once you come home from the hospital you may still need assistance. India is just starting to realize the need for some way to pay for the expense of looking after disabled and old people. Term insurance will only cover death and maybe accidental deaths. It also covers survival with benefits at the end of the policy term.
- Older people can live longer on their own if they have some assistance on a daily basis. Term insurance does not cover the costs of assistance over a long period of time.
- Being independent makes people feel they have some control of their lives. By getting assistance using your long term care insurance, you will be happier.
- The busy lives we lead causes even younger people to need help in case of illness. Term insurance covers your hospitalization but what about the recovery period? Who will pay for care then?
- As life expectancy goes up, long-term diseases are more common. You may need care for these lifestyle diseases. It can take care of these needs.
- In cases like dementia family members sometimes need help in caring for the patient at home. This is not a disease treated at a hospital. Long-term care insurance will cover the costs of this care.
- With diabetes and cancer at epidemic proportions in India, old people need more and longer care. Survivors need prolonged aid, post-cancer treatment. Term insurance is inadequate for this.
- Life and health insurance take care of curing your disease through hospital treatment, but you need care after the treatment as well, buying long-term care insurance will take care of this for you.
- With the increase in income levels, LTC insurance is more affordable
- You have peace of mind that you or a family member will not be burdened financially
- The cost of premiums will be high. It may even go up at a later date.
- Getting adequate coverage in an inflationary economy is a challenge
- You need to qualify for LTC insurance. Very often an older person with pre-existing conditions will find it difficult to get coverage.
- If you need LTC, your insurance company must agree you really need it and release the funds. You will probably qualify for Long Term Care insurance when you need help with at least two daily activities such as bathing or dressing, etc.
- There is a long wait till your insurance company releases the payment. You must have some backup money to sustain till then.
- Time limit to how long LTC will be paid for by the company. They may stop payment, even when you still need to pay for assistance.
- The insurance company may have a say in which caregivers you have. You may not be comfortable with a certain agency or professional, but you may not be able to refuse their services because of the Insurance company rules
Funding the difficulties of old age is definitely a challenge. Term insurance may not cover all aspects of living. You must have a lot of foresight to think about what diseases you may get or how long you will live. You may wonder whether you will live long enough to utilize the LTC benefits after paying a huge amount in premiums.
You should also think of the alternatives, think whether you can manage on your own or whether you want to burden children with financial problems. Being independent is a prized possession for some old people and makes you feel healthier and happier. So when the opportunity for a Long Term Care Cover insurance policy comes, make a wise decision on whether it is the right choice for you.
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