USAA Long Term Care Insurance Review, Rates and Comparison
USAA Long Term Care Insurance Review
This USAA long term care insurance review will help you understand what USAA offers and your options. Here’s the key points covered in this article:
- Does USAA sell long term care insurance?
- What is stand-alone long term care insurance?
- Comparing the USAA long term health care plan.
- Alternatives to long term care insurance.
- Who needs long term care?
- When to buy long term care insurance?
Click To Get A USAA Long Term Care Insurance Comparison. We’ll give you quotes for the leading LTC insurance providers in your state and compare them to the USAA long term care offering.
Does USAA Offer Long Term Care Insurance?
USAA does not currently offer a stand-alone long term care insurance policy. Stand-alone long term care insurance policies are also known as traditional long term care insurance.
The USAA long term care insurance offering is a Universal Life Insurance Policy with a Long Term Care Rider. The policy is from John Hancock Life Insurance Company and focuses more on the death benefit than the long term care benefit.
How the USAA long term health care offering works:
- The Long Term Care Rider is An Accelerated Death Benefit Rider.
- The death benefit of the life insurance policy is also the long term care benefit amount. If the death benefit is accelerated for long term care expenses, the death benefit is reduced dollar for dollar, and the cash value is reduced proportionally.
- There is NO extension of benefits like most hybrid long term care insurance policies. The Accelerated Death Benefit Rider only uses the death benefit to pay for long term care expenses.
- There is no benefit increase rider (inflation protection) to keep the long term care benefit in pace with rising long term care costs.
Compare USAA Long Term Health Care Insurance
A good comparison to the USAA Long Term Care Insurance offering is the Nationwide Insurance Universal Life policy. It makes a great comparison because the Nationwide policy is also built on Universal Life Insurance, like the USAA Long Term Care insurance offering. But one significant difference is that Nationwide includes a Cash Indemnity Benefit.
Nationwide Cash Indemnity Long Term Care Benefit
Here’s how a Cash Indemnity Benefit works:
- Nationwide pays the entire monthly long term care benefit each month.
- Nationwide Insurance places no restrictions on how you use your LTC benefits.
- Even family and friends can be paid to provide care.
- The policy will pay 100% of benefits internationally.
Most long term care policies provide reimbursement benefits. With reimbursement benefits, bills and receipts must be submitted to the insurance carrier for approval. The insurance company then reviews the claim and reimburses the exact amount of approved expenses, up to the amount of the monthly benefit.
Long Term Care Insurance Options
Stand-Alone Long Term Care Insurance
You pay an annual premium, and if you need long term care due to a cognitive or physical impairment, the policy pays for your care. Traditional LTC insurance policies make up about half of all long term care policies sold. Other features of stand-alone long term care insurance include:
- Long term care protection is the number one goal.
- Inflation protection is offered as a rider. This keeps the benefits up to pace with cost of care increases.
- Shared policies are an option (one policy covers a couple).
- Tax advantages for tax-qualified LTC plans.
- Premiums may increase.
Alternatives To Long Term Care Insurance
Hybrid Long Term Care Insurance
Hybrid long term care policies are the popular alternative to long term care insurance. They combine the benefits of life insurance, or an annuity, with long term care benefits. You can buy a hybrid long term care insurance policy by paying a one-time lump sum premium, or over a set period of time.
If long term care is never needed, the policy works like a traditional life insurance policy. It would then pay a death benefit to your beneficiary when you die. And the death benefit is often similar to the amount paid for the policy. But if you need long-term care, the amount of money available can exceed the death benefit or long term care annuity value, often several times over, offering tremendous leverage of premium dollars.
Who Needs Long Term Care?
Someone turning age 65 today has about a 70 percent chance of needing some type of long term care during their lifetime. While one-third may never need long term care, 20 percent will need it for longer than 5 years. The average length of time people need long term care services is 3 years.1.
Nationally, the average cost for 3 years of long term care is $325,215 ($108,405 per year) at 2021 rates. That cost of care is projected to be $587,373 ($195,791 per year) in 2041.2.
And it’s not only seniors that need long term care. Over 35 percent of people currently receiving long term care services are between 18 and 64.3.
When To Buy Long Term Care Insurance?
Like most advisers, we recommend buying long term care insurance in your fifties or early sixties. The primary reasons for this recommendation are:
- The younger you are when you buy a policy, the lower the annual premiums.
- By the time you reach your mid sixties, you’re more likely to have a medical condition that makes you ineligible for a preferred-health discount, or makes it tough to get coverage at all.
- Even though you’ll pay premiums a longer period of time, you’ll typically pay less overall than someone buying at an older age.
So it almost never pays to wait. And, while you’re waiting, you’re uninsured. If an accident or illness happens causing you to need long-term care, you’ll have to pay out of pocket.
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1. 2022 U.S. Department of Health and Human Services (www.longtermcare.acl.gov), site accessed 05/12/2022
2. Cost of Care Survey 2021 (Genworth.com), site accessed 05/12/2022
3. Family Caregiver Alliance (www.caregiver.org), site accessed 05/12/2022