Long Term care Insurance


Long-term care refers to a broad range of medical and personal services for individuals who need assistance with daily activities for an extended period of time. This includes day-to-day care that a patient receives in a nursing facility or at home, following an illness or injury, or in old age.

Long-term care (LTC) insurance helps pay for these services.

Substantial Resources Required

LTC insurance is costly and usually doesn't cover all of your LTC needs. Consider if you have substantial resources to guarantee that you can afford the premium now and well into the future if it increases. Check if you qualify for Medicaid - it may meet your long-term care needs.

Asset Protection

You may choose to buy a LTC policy to protect assets you have accumulated. But a long-term care policy is not a good choice if you have few assets or a limited income. Some experts recommend you spend no more than five percent of your income on a long-term care policy.

Is a Long term care Policy right for you?

Policies offer varying amounts of coverage. Study a policy, understand what it covers, and determine if the benefits are likely to meet your needs into the future.

5 Quick Tips
  • Avoid a long-term care policy if you are eligible for Medicaid now.
  • Remember that insurers can increase your premiums in the future.
  • Some experts recommend spending no more than five percent of your income on a LTC policy.
  • You may return a policy within the first 30 days and have any premium refunded.
  • Free counseling and additional information about long-term care insurance is available through the certain State specific agencies.
Factors to Consider

A LTC policy is just one possible component of a comprehensive financial strategy. Here are some additional factors to consider when looking at LTC insurance.

Age and Life Expectancy

The longer you live, the more likely it is that you will need LTC. Do you have family members that have lived a long time? Women are more likely to need LTC because they have longer life expectancies.

Nonforfeiture Provisions

The younger you are when you buy the insurance, the lower your initial premiums will be.

However, there is no guarantee your rates will not go up. Look for policies with nonforfeiture provisions. If premiums become unaffordable, nonforfeiture provisions can give you the option to get some money back, keep the policy with reduced benefits, or keep the same benefits for a limited period of time.

Family Care Situation

If family care is not available and you cannot care for yourself, paid care outside the home may be the best alternative. It is important to buy a policy that will cover the type of care you expect to need and that will be available in your area.

Family Health History

If chronic or debilitating health conditions run in your family, you could be at greater risk than another person of the same age and gender.

Income and Assets

You may choose to buy a LTC policy to protect assets you have accumulated. But a long-term care policy is not a good choice if you have few assets or a limited income.


What are the Befits of Long Term Care Insurance Policy?

You pay a premium and then the policy pays for covered services when you need them, up to limits in your policy. Policies offer varying amounts and types of coverage. Most will pay for or reimburse policyholders a limited amount for qualified services.

Benefit Period

Policies normally pay benefits by the day, week, or month. You may choose a benefit period that is a specific number of days, months or years. A maximum benefit period may range from one year to the remainder of your lifetime.

It is important to ask if the benefit amounts will increase with inflation and if that coverage increases your premium.

Qualifications / Requirements for Coverage

Coverage is not guaranteed until you satisfy certain requirements. For example, you must be unable to perform two of the six daily living activities: dressing, bathing, continence, eating, transferring, and toileting.

Many policies further limit payment to qualified services consistent with a coordinated plan of care established by specific individuals under the policy.

Also, most policies have a benefit trigger for cognitive impairment. For example, you may only qualify for these benefits if you are unable to pass a mental functioning assessment.

Exclusions

Every policy has an exclusion section. Many LTC policies exclude coverage for:

  • Mental and nervous disorders or diseases (except organic brain disorders)
  • Alcoholism and drug addiction
  • Illnesses caused by an act of war
  • Treatment already paid for by the government
  • Attempted suicide or self-inflicted injury
Elimination Period

The number of days you must qualify under the policy before your policy pays benefits is called the elimination period. A shorter elimination period means a higher premium. Elimination periods can range from zero to 180 days.

Changing Policies

Before you change to a different long-term care policy, seek the advice of your present insurer, agent, or financial advisor. It is in your best interest to understand all the relevant factors involved in replacing your long-term care insurance policy.

Note that health conditions that are currently covered may not be immediately or fully covered under a new policy. A claim that is payable under your current policy may be delayed or denied under a new policy because you would need to satisfy a new waiting period.

Make sure that your application is complete and truthful concerning your medical history. Any inaccurate or omitted material medical information may affect how the insurer pays a claim.

How Premiums are Determined

The cost depends on the amount and type of care you need and where you get it.

Factors include:

  • Your age when you buy the policy
  • The maximum amount that a policy will pay per day
  • The maximum number of days or years that a policy will cover
  • The lifetime maximum amount that the policy will pay
  • Any optional benefit you choose, such as benefits that increase with inflation
  • Policy exclusions