LONG-TERM CARE INSURANCE ATTRACTIVE

This "Financial Focus" column is prepared by Edward Jones Investments, headquartered in St. Louis. Jones includes branches throughout the nation, including Cape Girardeau and Jackson.

Each year, one out of every 1,200 homes catches fire, and most homeowners have insurance coverage. Each year, one out of every 240 cars is totaled, and most car owners are covered. And each year, one out of every four people age 65 or over will have a long-term nursing-home stay -- yet only 4.5 percent of these people are covered.

As the population of older Americans has begun to increase, so has the need for nursing-home care. So, long-term care insurance has become a necessity for many people. This type of insurance can be an inexpensive way to protect your life savings from the devastating costs of a lengthy nursing-home stay.

Now, owning long-term care insurance just got more attractive. As of Jan. 1, 1997, individuals are able to deduct long-term care insurance premiums (subject to certain limits) just like any other medical expenses that exceed 7.5 percent of adjusted gross income. The tax break applies to all long-term care policies issued before 1997. Those issued on or after Jan. 1, 1997, must meet federal guidelines to qualify for the deduction. In addition, long-term care benefits may be excluded from taxable income in 1997.

This is good news for many Americans. As the baby-boom population ages and life expectancy increases, the need for long-term health care also increases. There are 33 million Americans over age 65, and this segment of the population will continue to grow over the next 35 years. And nearly 50 percent of people 65 and older will spend some time in a nursing home. With nursing-home costs averaging $38,000 a year and Medicare paying 2 percent of those costs, few people have the financial resources to handle a long stay in a nursing home.

Long-term care insurance can answer this need. It can help cover the cost of a nursing-home stay, home-care and other types of long-term care for as long as the patient needs them. When evaluating long-term care insurance, look for the following features.

Financial quality of the company

Choose a long-term care insurance provider that is highly rated by respected rating agencies. Look for at least an "A" rating from A.M. Best and an least an "A+" by Standard & Poor's and Duff & Phelps.

No age limits

After you're accepted for coverage, your policy should pay benefits no matter what age you are when you file a claim.

Coverage for all levels of care

Your policy should pay benefits no matter what level of care you receive -- from short-term skilled nursing to long-term custodial care.

Parkinson's, Alzheimer's and senility coverage

Look for policies that cover these common conditions. No policy will cover these problems if they are pre-existing.

Stable premiums

Once you're covered, your premium should remain unchanged. Most insurance companies reserve the right to increase premiums for a group or class of policyholders, but look out for companies that historically have raised rates for policyholders.

Claims-payment history

Be certain that the company has a solid track record of paying claims and providing timely service. Some companies audit and publish their historical claims track record annually.

Cheapest is not always best

Many policies have low premiums and offer features that you may find attractive. A word of caution, you're buying a benefit that you may not receive for many years. Rate increases and inadequate service will quickly negate any benefit of a low initial premium.

These are a few things to look for in long-term care insurance. Be sure to evaluate a number of policies from several reputable companies, and only buy insurance from someone you trust.

If you ever require a nursing-home stay, the last thing you want to worry about is the cost. Fortunately, our legislators are beginning to recognize this problem and have passed new tax laws to make long-term care insurance more affordable. Long-term care insurance not only can protect your savings but also prevent you from being a financial burden on your loved ones.

The Southeast Missourian does not recommend that readers buy or sell stocks featured in this column, which is provided for informational purposes only.