Nothing can wipe out your life savings quite like the cost of long-term care.

One day you’re enjoying the good life in your plush condo in Boca, the next thing you know you’ve had a stroke, you’ve moved into a nursing home, and within a few years there’s nothing left for you or to bequeath to your children.

Long-term-care insurance is essential if you want to avoid this scenario for you or your parents. This insurance will cover the costs of chronic care should you become unable to perform the basic activities of daily life such as dressing and bathing. Nursing home care costs an average of $75,000 a year. Round the clock in-home care can cost even more. A long-term-care policy is the best way to ensure that you don’t lose your life-savings on nursing care, become a burden to your family members or lose your choices for how you want to live.Here's what you need to know:

The Insurance Options. There is a lot of variety in long-term-care insurance. It’s important to comparison shop to get the best deal and the best coverage. The sooner you buy a policy the better because premiums will be lower and you’ll be more likely to qualify. (Existing medical conditions might exclude you from some policies.) If you’re working, see if your employer has group long-term-care insurance you can buy. This option will likely be the cheapest. When shopping for individual coverage, choose an insurance company with a long track record and good rating. Standard & Poor’s provides ratings for insurers. John Hancock, Met Life (Stock Quote: MET) and Genworth (Stock Quote: GNW) are some of the most popular and respected long-term-care insurers. 

The Insurance Benefits. Choose a policy that pays enough daily benefits to cover the costs for nursing care in your area. Nursing costs can vary considerably from region to region. Do a little research to make sure that you don’t fall short when the time comes to exercise your benefit. Most policies allow you to choose between lifetime benefits—the most expensive—and benefits that provide coverage for a specified period of time. On average, people only spend three years or less in nursing home, so it makes sense to forego the lifetime benefits and save on your annual premium.

The Deductable. Another way to save on premiums is with an elimination period—the number of days you pay for long-term care before the benefit is exercised. An elimination period is like a deductible. In some cases, a 60 or 90-day elimination period can lower your annual premiums by more than half.  Be careful to read all the fine print on a policy before you buy, however. Make sure dementia is covered and that benefits are adjusted for inflation every year.

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