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Evaluating long-term care insurance

June 26, 2007

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My youngest child is incredulous when I tell her that mothers know everything.

"Mommy, how can you know everything?" she'll shoot back with her little hands on her hips.

"Because, I just do," I say.

I'm teasing her, of course. But I do tell my 6-year-old that if I don't know something, I either will find out the answer for her or show her where to get the information. That's how I approach the many questions I get during my regular online discussions. If I don't know, I'll try to point you in the right direction as I did for the following readers in a recent chat:

Q: Who should buy long-term care insurance? How do you evaluate the various plans?

A: For those who don't know, long-term care insurance can cover the cost of nursing homes, assisted-living facilities and in-home care. In most cases, the insurance will cover expenses for those who need assistance with such daily activities as eating, dressing and bathing, or who have a severe cognitive impairment such as Alzheimer's disease.

This is expensive insurance. Depending on your age and the options you choose, yearly premiums vary greatly from $1,000 to as much as $8,000. I suggest you visit www.aarp.org, which has a lot of really good information on buying long-term care insurance. I certainly plan on buying it when the time is right.

One consideration with this type of insurance is: Do you have assets that you don't want to spend down should you need long-term nursing home care? If you are nearly broke now, you may not be able to afford this insurance and you would quickly qualify for state aid.

Before you buy, also read "A Shopper's Guide to Long-Term Care Insurance," produced by the National Association of Insurance Commissioners (www.naic.org).

Q: I'm young (think 30 years or so from retirement) and have several health problems, some of which have been difficult to diagnose. My mother is afraid of my becoming incapacitated and wants me to have long-term care insurance. I'm just not sure it's right for me. I don't think the AARP site will help.

A: Look at the Web sites such as the one belonging to AARP. They offer plenty of tips on policies, when to buy, etc. If at this young age you anticipate some major health issues that will require care sooner rather than later, you might consider long-term care insurance. But if you're only guessing and it might be 30 years before you need this care, don't pay for this insurance yet.

Q: Does placing a fraud alert with the three credit agencies hurt my credit score?

A: Placing a fraud alert on your credit reports does not affect your credit score. And you should place it on all three if you think you are the victim of identity theft.

But please keep in mind, some lenders still may overlook or ignore the alert. It's not foolproof. You may want to consider getting a security freeze instead. To find out the details of a security freeze, which blocks even creditors from pulling your credit reports or credit scores and thereby makes it difficult for someone to get credit in your name, go to www.financialprivacynow.org.

In many states, it doesn't cost you anything to put a freeze on your files if you have been a victim of identity theft.

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