Benefits in a Long-Term Care Insurance Policy
Core Benefits of a Long-Term Care Insurance Policy
There are several core benefits that make up a long-term care insurance policy, and because of this it makes it quite complex. Below is a description of the core benefits that make a LTC Insurance policy.
Daily Benefit - This is the amount that the LTC insurance policy will pay per day when you need care. Most policies range from $50 to $300 per day. To determine what Benefit Period you should purchase, it is recommended that you go by the average cost of care in your state. You can obtain this information by visiting the Genworth 2012 Cost of Care Survey.
Benefit Period - This is the amount of years that the LTC insurance policy will pay for coverage. Most policies offer a 2, 3, 4, 5, 7, 10, and lifetime benefit period. Most people purchase a 3 to 5 year benefit period. Studies indicate that the average stay in a nursing home is 2.4 years. However, this does not include any home health care stay or assisted living stay that one might need prior to entering a nursing home. Lifetime benefit period should be considered if it is affordable and if you have longevity and/or dementia that is prevalent in your family history.
Inflation Protection - Long-term care costs are expected to rise in the future, so it is recommended to purchase some type of inflation protection. There are three different types of Inflation Protection that are offered on most long-term care insurance policies.
Simple Inflation increases the daily benefit by 5% of its original amount. With simple inflation, benefits will double every 20 years. Compound Inflation is very similar to simple inflation except the daily benefits are increased by 5% of the previous year's amount. Benefits will double every 15 years with this type of inflation.
Some LTC insurance companies have the option of a Guaranteed Purchase Option (GPO) AKA Future Purchase Option. GPO gives an individual the option to increase the daily benefit, this is typically offered every 3 years.
Elimination Period - This is the time where you will be responsible to pay for the cost of your long-term care before your policy will begin to pay benefits. This is also known as a Deductible. The time period on policies are usually 30, 60, 90, 180, and 365 days. A 30 to 90 day Elimination period is usually recommended.
These benefits listed above are just the core benefits that all long-term care insurance policies include. Most companies do offer other policy riders and benefits which are typically known as the "bells and whistles". Some of the more common ones are Nonforfeiture, Return of Premium, Shared Care, Restoration of Benefits, and Survivorship. These are all typically optional benefit riders which do cost extra. Below is a description of the additional benefits and riders.
Additional Long-Term Care Policy Benefits and Riders
Nonforfeiture - If you should let your long-term care insurance policy lapse after it has been in force for 3 years, you will still have some protection - either a reduced paid-up benefit account equal to the total of all premiums paid or 30 times your daily maximum at the time of your policy lapse, whichever is greater.
Return of Premiums - After you pass away your premiums will be returned to your beneficiary, less any claims, if any.
Shared Care - This is where couples can share their benefits. For example, you both can purchase a 3 year plan and instead of only having the option of just having 3 years each with an individual plan with a shared plan you would be able to split those 3 years up. You could have 2 years and the remaining 4 years your spouse could use.
Restoration of Benefits - If you are receiving your long-term care insurance benefits and then you no longer need benefits for 180 days, then your LTC Insurance benefits will be completely restored to its original amount..
Survivorship - This is for couples who each have a long-term care insurance policy, if one spouse dies then the surviving spouse will not be required to pay any further premiums.
LTC Solutions - 3501 Del Prado Blvd. Unit 205 Cape Coral, FL 33904. LTC Solutions for consumers provides long-term care insurance quotes and product information from a long-term care insurance expert for many of the leading LTC insurance carries.
This website should be considered an advertisement, not a contract. The intent of this website is to gather information from the inquiry request and then contact the consumer to go over their specific needs. George Mellendorf, owner of LTC Solutions is licensed in all 50 states.