“Stay OUT of the Nursing Home” Insurance

nursing-homeI was on the phone speaking with a client who had purchased a long term care policy many years before. He was quite anxious saying he didn’t want to “use it yet” because he didn’t want to go to a nursing home. I was surprised to learn this gentle soul was afraid to use his policy because he thought it would put him in a nursing home – it is the same fear people have about buying one in the first place. I know because I hear that about once a week when I am speaking with those clients.

Well, let’s dispel this myth…. Modern long term care policies rarely require you to be in a nursing home for them to pay out.

To be fair, a few (mostly older) policies are “facility only” and may require assisted living or nursing home care to pay. But the vast majority of policies today should be labelled “STAY OUT OF NURSING HOME” INSURANCE.

I was on a recent call with a claim representative for Genworth, one of the carriers with the largest block of long term care policies in the market (Sorry! I don’t have a reference… they didn’t publish this, just spoke it orally!).

Their claim data over their tenure in this type of products shows the following:

AT FIRST CLAIM

  • 69% home care
  • 13% assisted living
  • 18% nursing home

AT DEATH

  • 61% home care
  • 21% assisted living
  • 18% nursing home

This tells us that the vast majority of care (70% or more… this data is for those with policies. Those without might drive the numbers up) starts at home. Further, very few of those migrate to higher levels of care. They start their care at home and the die while still in home care. So instead of an insurance product putting you in a nursing home, it actually gives you money to pay for care so you can stay at home longer!

Long term care insurance – it really can be “stay out of the nursing home insurance”.

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