According to the Center for Retirement Research (“CRR”) at Boston College, men have a 32% percent chance of letting a long-term care policy lapse and women’s chances of lapse are 38%. In 23% of the cases studied, those who let their policy lapse did so within four years of needing long-term care with one in three lapses caused through financial hardship or cognitive impairment.
The study indicates that the high lapse rate occurs for two primary reasons: policyholders run into financial hardship and cut this expense or they develop cognitive impairment and forget why they valued the insurance in the first place. There is little evidence that policyholders lapse “strategically,” meaning they reassess their health and determine the coverage will not be needed, according to the study.
Long-term care policies in Massachusetts cover home care, assisted living and nursing home care. It is not uncommon to see a monthly charge of at least $10,000 for nursing home care. Depending on the level of service required, the cost of assisted living can also reach that amount. Accordingly, it is critical that a care-giver child be mindful of policy premiums deadlines so coverage doesn’t lapse. Otherwise, a well-planned asset protection and care plan can be extinguished.
For full article click this link: http://time.com/money/4062163/long-term-care-insurance-study-lapse/