LONG TERM CARE POLICY TERMS
Group Policies versus Individual Policies: Be careful when examining group policies, because often they do not offer 100% of home health care benefits as individual polices typically offer. They will often reduce your home care benefits to 50% or 70%. Since the benefit 75% of most people use starts at home, don’t be fooled by group plans that charge you more money for reduced coverage.
Another disadvantage of buying a group policy is usually there are no “good health” discounts or spousal discounts are available. With some companies offering spousal discount up to 40%, and getting both you and your spouse covered is much more desirable, and less expensive.
Benefit Period: This is the time span for receiving insurance money. The benefit period determines how long you will receive payments from your long term insurance care policy. Common options are 2, 3, 4, 5, 6, and 10. Keep in mind that over 90% of all claims are 3 years and under, so if you buy a longer policy you may be over insuring.
Elimination Period: Also known as a deductible or a waiting period. This is the number of days before the policy begins to pay benefits. While a few policies have not elimination periods and pay benefits from the first day, the most common waiting periods are 20, 60, 90 or 180 days. The longer your waiting period the lower your premium will be. Modern policies do not require the days to be consecutive and it’s a one-time deductible.
Inflation Protection: It is a necessary option you can add to your Long Term Care Insurance policy that increases the benefits annually based on a simple or a compounded fixed rate such as 3% or 5%, or based on the yearly consumer price index (CPI). Alternatively some plans have a Future Purchase Option where you can option to increase the benefits in the future. With compounding your benefits can double or triple and even quadruple over time.
Maximum Benefit: Also known as the maximum policy value or pool of money. This is the maximum amount that a policy will pay for all covered expenses throughout the life of the policy. This is determined by multiplying the amount your paid daily times the length of the policy in days.
How are benefits paid: Policies using the expense-incurred method will pay the cost of the expense or the daily dollar limit of your policy. Whichever is less. Most policies use this method. Policies using the indemnity method pay a set dollar amount up to the limit of the policy regardless of the cost of the service your receive. You may have to pay taxes, even on a tax qualified policy, that uses this method on benefits that exceed your actual cost or a certain amount a day.
Shared Benefit for couples: This is an option rider that allows couples to share benefits. If one spouse runs out of money in their policy, they can use their spouse policy for benefits.
Waiver of premium: One of the most important features of a LTC policy, because it waives the premium once you begin receiving benefits. Plans from the top companies typically have this feature, but it is important to investigate.
Return of Premium Benefits: This benefit is a rider some companies offer that will return a portion or all of the premiums back to your beneficiary at your death subtracting any claims. Companies offer different variations of this option, so be sure to investigate.
Survivorship Benefit: This is a rider for couples, and depending upon the option, when 7 or 10 years pass, if no claims have been paid when one spouse dies, then the other spouse will have full benefits and will never have to pay premiums again.
There are a variety of options, cost consequences, and features that are offered by the Long Term Care insurance companies. It’s important to work with an Independent Agent, like Long Term Care USA that carries all the major LTC Insurance Companies because you are never going receive “unbiased” information from a local agent that just carries a couple of products and wants to “steer” you to the few policies that they sell. We will mail you the quotes from all the “blue chip” LTC Insurance Companies, just simply fill out the form below.
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Carriers quoted will vary from state to state.)