Buying long-term care insurance? Avoid these 6 big mistakes, experts say

Part of aging often means requiring extra support, beyond traditional healthcare. For example, many seniors, due to injuries, illness or other aspects of aging, often need long-term care such as a home health aide or living in a skilled nursing facility. In fact, someone who turns 65 today has nearly a 70% chance of needing long-term care, according to the U.S. Department of Health & Human Services.

Long-term care services can be particularly expensive, though. For example, in-home care like homemaker services or a home health aide cost in the ballpark of $6,000 per month on average, according to Genworth. Because standard health insurance and Medicare do not cover most aspects of long-term care, and since you might not be able to or want to rely on family members taking care of you, it often pays to buy long-term care insurance to help reduce what you might pay out of pocket. 

However, not all long-term care insurance policies are the same. They can vary substantially in terms of long-term care insurance coverage, cost, eligibility, etc. So, before you rush in to fill out a long-term care insurance application, watch out for the following mistakes, according to experts.

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Buying long-term care insurance? Avoid these 6 big mistakes, experts say

Experts say you should avoid making these big mistakes when buying long-term care insurance:

Ignoring other funding methods

While long-term care insurance can be valuable, it's important to consider other ways you might pay for long-term care so that you can figure out the right amount of long-term care insurance coverage to buy, if any.

"For many of our clients, we examine smart ways to use existing income and resources to best fund care in the face of additional retirement costs. Knowing how far existing resources can take a family during caregiving is a good starting point in determining the least insurance that might be appropriate," says Thomas C. West, senior partner at Signature Estate & Investment Advisors LLC.

You also might see if you have any long-term care benefits through your employer, which could be a great starting point, suggests Larry Nisenson, chief growth officer at Assured Allies.

Explore how the right long-term care insurance policy could benefit you now.

Assuming you're uninsurable

Many long-term care insurance companies have eligibility restrictions, such as if your health status seems to pose too big of a risk to the insurer. However, it's important to remember that not all long-term care insurance eligibility requirements are the same.

"Today's products assess risk differently than the previous products and even include some that offer guaranteed acceptance, regardless of health. Licensed agents can help consumers find the right product, even for those that have been denied coverage previously," says Nisenson.

Skipping in-home coverage

To save money, some people buy long-term insurance that only covers hospitalization or a facility, such as for memory care. Yet getting this coverage, without also making sure the policy includes coverage for in-home care, is a mistake, says Allen Haney, co-founder and president of The Haney Company.

"People don't understand how much care must be given before someone goes to a memory care facility," says Haney, who has first-hand experience as his wife passed away from Alzheimer's.

Not buying inflation protection

One option when buying long-term care insurance policies is often to add inflation protection so that the benefit amount can increase over time to keep up with increasing care costs.

"The cost of medical care goes up every year," says Haney. "You need to make sure your policy benefit goes up too."

Waiting too long to buy a policy

Another mistake to avoid is waiting too long to buy a policy, to the point where premiums become unreasonably high or you're no longer even eligible.

"It's ideal to purchase long-term care insurance in your 50s when you are still relatively young and healthy. Postponing the purchase can lead to higher premiums or even denial of coverage due to health issues. Additionally, not having long-term care insurance can limit your options for care," says West.

Adding too many extras to a policy

While certain aspects of long-term care insurance policies can be worth adding, such as inflation protection and in-home care coverage, you want to keep your guard up about piling on too many other add-ons that increase costs or don't really serve your main purpose of protecting the policyholder.

Some providers "tack on things that have no value," says Haney. 

In his view, for example, a return of premium provision isn't worth it. "That's window dressing," he says. 

The bottom line

Buying long-term care insurance can be a critical part of protecting yourself or your loved ones from high costs and help you get the care you might need. However, there are some pitfalls to look out for. Like with many other types of insurance, policies vary, and it's important to make sure you understand what you're buying and how the costs compare to alternatives.