Buying insurance under normal circumstances is a tricky business. You dont know how much coverage you need. Plus, you dont know if and when you will need that coverage. Thats how the insurance game works. You pay a certain amount for protection when you do go through medical injury or surgery and need care. The insurance companies make their money from your premiums and pay out claims as required by the policy when medical injury or surgery needs approved coverage.

Is there such a thing as insurance for long term care? How does insurance work for long-term care? These are great questions. Yes, there is such a thing as purchasing insurance for long-term custodial care. This type of insurance covers the costs accrued by caring for chronic illnesses or various disabilities. The claims pay for everything from home health care to skilled nursing care for months or even years.

This sort of insurance works like regular insuranceyou pay a premium and claim the insurance when you or your loved one is diagnosed with the chronic malady or disabilityto cover out-of-pocket expenses such as home health care or skilled nursing facilities. There is usually a waiting period of 90 to 120 days that is used like a deductible, where you have to wait to receive the out-of-pocket benefits.

According to the American Association for Long Term Care Insurance, the average couple, age 60, should expect to pay an average of $3,335 per year to pay out on a plan that gives $150 of coverage per day over a three-year period. Prices and pay outs go up as the recipients get older. A 65 year old couple would expect to pay an average $4,433 for the same coverage.

This insurance does show some benefits, particularly to individuals who have no children, are 60 or older, and have little or no retirement savingsas long as any chronic illness can be treated within the time frame allotted by the insurance company.

Why is it so expensive? Insurers dont know how much a claim is going to behow much time and care is needed for a long-term care patient. Generally, these plans pay out only over a three-year period for that reason.You should also consider that many of these plans dont have surrender clauses, where you would get money back if you never need a claim during the period of insurance. You might pay and pay, only to see no return if you dont qualify for care.

There is also the issue of rate hikes that some people who have the insurance, cannot continue paying. Should they continue to scrape to pay for the potential benefits, or get rid of the insurance and have no benefit at all?

If you are looking for such an option, consider carefully whether you should invest in retirement accounts, like a 401K, reverse mortgages, or a long-term care plan.

Working as a caregiver for a parent or loved one takes more than just time and energy. Caregivers must balance work life at their day jobs along with taking care of their loved ones. In some cases, caregivers have to sacrifice time at workor working at allto help their loved ones. This sort of sacrifice hurts the caregivers as this results in lower wages and also lowers social security and pensions when they return to the workforce.

Serving as a caregiver is noble and rewarding work. However, this service is often without compensation or recourse of any kind. The sacrifices coupled with the financial strain for the caregiver can cause extreme tension in his or her relationship with the recipient parent or loved one, which could negatively affect the caregiving dynamic.

One way to alleviate this stress is to draw up a personal caregiving contract between the caregiver and the parent. Such a contract would spell out all of the duties and expectations of a caregiver and include language regarding compensation, which would pave the way for the caregiver to receive some fashion of compensation for his or her time. A contract would also spell things out for the rest of the familyspouses, siblings, childrenwho may feel slighted or misunderstand the arrangement between caregiver and loved one.

Some parents choose to reward their primary caregivers in their estate. However, this may cause tension between siblings or will contests. Another good reason to have a legal contract is to help the older adult qualify for Medicaid. If the older adult is planning to pay the caregiver, and there is no agreement in place, the payments to the caregiver will be looked upon as gifts. This will slow down the process of qualifying for Medicaid.

Making a contract might not be an easy thing. The child, or caregiver, might look at this as a labor of love and not think about accepting money, or the parent might believe it is the childs duty to serve as a caregiver. Frank conversations about caregiving may be difficult, but all involved may actually feel relieved once it is taken care of.

A contract contains time periods, terms of service and compensation for service. Caregivers should be explicit in the types of duties they will agree to perform, such as driving their loved ones to doctor visits, shopping, cooking, or bathing.

How much the caregiver will be compensated needs to be included. To decide the amount, the caregiver should call around the local caregiving agencies to see what the current rates are. If the older adult does not have enough money to pay his or her caregiver, there may be other sources of payment. A long-term care insurance policy may cover family caregivers, for example. Also, there may be state or federal government programs that compensate family caregivers. Check with your local Agency on Aging to get more information.