By Rosemarie Hurley, Long-Term Care Insurance Specialist –
There are many companies offering Long-Term Care policies. Although they all have a few options that can set them apart, or the most part, they all have the same policy “skeleton”. There are two parts to that “skeleton”–one is automatic, built –in benefits, and the other is based on your personal and financial preferences.
Here are some policy basics:
What kind of coverage do you want? Home Care or Facility Care (Assisted Living and Nursing Home Care), or a comprehensive plan that will pay for all three?
How much do you want to be paid in benefits when you qualify for a claim? At the time you purchase the policy, you select a “daily benefit”—for example $180.00 per day. That means that when you need the policy, the company will pay to you $180.00 per day or approximately $5400.00 per month for the expense of your care.
How long do you want the company to pay on this claim? You may choose an “unlimited policy”—pays for as long as you need it, or a shorter benefit period for example, a 3 or 5-year benefit. This means that you have the chosen number of years in which to recover and after that time frame has passed, the company is no longer responsible. You agree to pay the rest out-of-pocket.
There is a “deductible” or Elimination Period. You may choose 0, 30, 60, 90 days –these are the most common—some companies offer 100 or 180 days. The higher the number of days, the lower your premium. You are agreeing to pay that number of days out of your own pocket before the company will be responsible.
Inflation Protection is very important, depending on how old you are when you buy the policy. Most companies offer “compound” or “simple” inflation at 5 %. If selected, the company must automatically increase your benefit by that amount every year. Since it is built in, it does not increase your premium when the benefit increases. With older clients, it is better to discuss this benefit choice in person to determine the best way to go. With younger clients I ALWAYS recommend inflation protection.
Each company has a Health Rating System that determines premium cost. The amount you pay for your policy is based on the choices you make from the above list, AND your age and health risk.
Usually there are several categories of risk. Naturally the healthier the risk, the less expensive your premium. And there are certain health conditions that are uninsurable no matter how old you are. Here are a few: a Smoker with Emphysema, severe Osteoporosis, already diagnosed Dementia, Alzheimer’s or Physician documented Memory Loss or Confusion, severe Diabetes – with insulin.
Most policies have a “waiver of premium” included in the policy. It states a number of days after the claim begins, and after that date, you stop paying your premiums.
There are even plans that offer a return of your premiums paid, if for some reason you do not go on claim while you own the policy. All the premiums paid in to the policy are refunded to a beneficiary upon your death. Of course the premiums to add this rider are higher, but for some people, the idea of getting the premiums returned is very attractive.
These are the most important items that make up a policy. Whether you choose a limited policy or lifetime coverage, remember, it is ALWAYS better to have a policy in place, even if it is a smaller benefit than you might choose if money were no object, than to be without coverage at all.