LTC, short for long term insurance, is an insurance policy that offers to cover the long term care of the person’s life term. It helps to pay for any health related costs the person may face in their life. This insurance helps especially if the person has a chronic health related problem and needs to pay the associated medical bills. People who have long term health issues like diabetes, alzheimer’s, etc.
Age is not considered to be the determining factor of the long term insurance policy, as age groups between 18-65 also opt for this policy, along with those after 65.
| Benefits and Drawbacks of Long Term Insurance |
| Advantages of Long Term Insurance | Disadvantages of Long Term Insurance |
| -Helps you pay costly bills | -Drain on resources |
| -Can be availed whenever you fall sick | -Ultimately costs you more than it helps |
| –Age is not the determining factor | -Cost of some plans may suddenly increase |
| -Attractive variety of coverage | -Premium plans begin to cost more as you start to age |
| -Eligible for income tax deduction | –You may end up not needing many of the services |
| -Eligibility based on ADL | |
| -You do not have to be dependant on others |
Advantages of Long Term Insurance:
- Helps you pay costly bills.
Paying the costs associated with medical bills can leave someone with innumerable financial problems, along with their health issues. This is especially an issue when it comes to illnesses that are chronic. Therefore, long term insurance policies are a saviour in need. They pay for innumerable trips to the hospital and most of the associated care.
- Can be availed whenever you fall sick.
Long term insurance policies are very helpful in the case of lifelong illnesses. If your condition suddenly worsens after some time of no-show by the condition, you can avail the benefits provided by your long term insurance to pay for the services you require. You can avail them anytime you fall sick.
- Age is not the determining factor.
While it is recommended by the American Association for Long-Term Care Insurance that you buy insurance by the age of 55+, you can avail long term insurance even if you are younger than that. You can buy LTI policies between the age of 18 to 65 years of age.
- Attractive variety of coverage.
Based on the providers from who you purchase your long term insurance policy, you can get a variety of services with your coverage. Some of the options that you get with LTI coverage are care facilities for memory affected patients, communities that offer assisted living, daycares for adults, hospice, etc. Some coverage can even provide home care.
- Eligible for income tax deduction.
Premium plans that come under long term insurance are subject to and qualify a tax benefit deduction according to Section 80C of the 1961 Income Tax Act. You are eligible for a deduction that extends up to Rs.1.5 lakh which you can claim per financial year. The age of the person who avails coverage is a factor in the amount of deduction. The benefits that are derived from LTIs are excluded from incomes.
- Eligibility based on ADL.
Long term insurance policies can be evoked based on the criteria of ADL which stands for activities of daily living — eating, bathing, toileting, transference, continence and getting dressed. If a person fails two of the six ADLs, then they are eligible to get coverage from long term insurance.
- You do not have to be dependent on others.
Many people feel that they are a burden on others because of their health and disability. A long term insurance policy allows you to be independent and avail excellent care without draining someone else’s finances. Many elderly people do not like being dependent on their children for finances and quality care, so LTIs are the perfect solution.
Disadvantages of Long Term Insurance:
- Drain on resources.
Paying for any sort of insurance, especially one that is long term, is a vast drain on your resources, while these help in paying for costly medical bills, LTI plans dig away at your life savings. If you have saved up to invest in some plan, be it a car, a new house, etc., this money will end up funding for the costly premium plans offered by LTIs.
- Ultimately costs you more than it helps.
Say you have invested in long term insurance. This will definitely help you battle the costs associated with several hospital trips and/ or home living assistance. However, some providers may charge more than others for the same services provided. This may cost you more than paying for those services yourself.
- Cost of some plans may suddenly increase.
The cost of premium plans are usually expected to rise, but they can suddenly increase with no prior notice. While you can opt to continue with the current plan, or discontinue it, the provider can change the cost of such premiums at any given moment, which will hurt you more financially.
- Premium plans begin to cost more as you start to age.
As you begin to age, your medical needs will increase, and your condition may worsen or lead to other health related issues. Insurance providers see this as an opportunity to increase the cost of premium plans as you age. Their reasoning that with age comes more health issues that need to be cared for is valid, but still burns a hole in the pocket of the person.
- You may end up not needing many of the services.
Some people who buy long term insurance may end up paying for services they do not need or us. Insurance policies offer packages from which you choose the one that suits your needs the best. However, you may end up paying for services which you don’t use, and thus the money is wasted.
Long term Insurance is beneficial for those suffering from permanent or chronic disabilities. It helps to pay for many of the services which would otherwise be too expensive to avail. However, the costs associated with paying for LTIs are very expensive, and are an elite service provided to only those who can afford them.
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