Long Term Care Insurance Policy Coverage and Features
Today’s long-term care insurance (LTCI) plans have broadened to include almost any condition a person might experience to help assist with paying for the care. Benefits begin after an elimination period (deductible) has been met and continue until the death of the insured or until the policy's lifetime maximum benefits have been used up. Most Long Term Care Insurance policies will offer benefits that will pay for nursing home
care, assisted living facilities, and home health and community care. Insured people can choose from:
• comprehensive policies that provide benefits for services at all levels of institutional, home, hospice and community-based care;
• facility-only policies that limit coverage to care in institutional settings; or
• home care-only policies that limit coverage to care in the insured’s home or to care in the community. However, most long term care insurance policies sold today are comprehensive plans that will cover all levels of care, the facility only or home care only plans have been phased out for the most part.
When is a Long Term Care Insurance benefit paid?
Benefits under a Long Term Care Insurance policy are paid when the insured provides proof of loss; this loss must be certified by a licensed health care practitioner and is when they show the insurance company the patient cannot perform at least two activities of daily living. Also, a separate way to qualify for benefits is if your doctor certifies that you have a significant cognitive impairment such as Alzheimer's, which means a deterioration of intellectual capacity for judgment, memory, or orientation.
How are your Long Term Care Insurance Benefits Are Defined?
LTCI benefits are defined in the insurance contract to be a maximum amount of money payable per month or per day and for a maximum number of years (such as 3,4,5,10, or lifetime). If the policy holder uses less than the maximum amount of benefits allowed in the benefit period, the remaining unused money will extend the maximum number of years benefits are payable. This feature is known as the pool of money clause. Most policies pay a fixed daily or monthly benefit amount as reimbursement for the cost of care up to a daily or monthly maximum.
Inflation Protection
Most claims do not occur until many years after the purchase of the product, so an important aspect of a Long Term Care Insurance policy is inflation protection which keeps your benefits in line with growing costs due to inflation. In 20 years, the daily cost of receiving long term care may be three or four times what it is today. All long term care insurance plans offer either a future purchase option, which allows policyholders to periodically buy additional coverage down the road, or an annual benefit inflation protection, which increases a policy’s benefits on the policy anniversary date at a compound or simple interest rate of growth.
All states require that Long Term Care Insurance policies be issued as guaranteed renewable contracts. This means that the policy cannot be canceled because of a change in health and that individual's premium cannot be increased as result of an increase in age. However, premiums can be increased on a class basis when certified by the state's insurance commissioner. Insurers can increase premiums for the entire class of policy holders, such as all policyholders age 60-65, based on the company’s claims experience. To do this increase, insurers must justify premium rate increases to state insurance departments, but keep in-mind that states have limited authority to deny those increases, especially when claims experience supports requests for rate increases. This is why it is imperative to go with a financially strong company with good ratings. Good ratings do not mean the an A+ company won't increase the rates, but most blue-chip companies with good brand name recognition tend to increase their rates less often and at much lower percentages than the bottom feeder companies.
Long Term Care Insurance Underwriting
Long Term Care Insurance underwriting is different than life and health insurance plans. When underwriters are deciding whether to issue a life or health insurance policies, they consider factors such as current physical health, health history, lifestyle, occupation, and avocations. Long Term Care Insurance goes a step further and considers current cognitive health. When applying for long term care insurance, buyers should expect customary medical questionnaire as well as a professional assessment of their cognitive facilities for any possible signs of cognitive impairment. Cognitive disorders such as memory loss, and dementia are major contributors of nursing home admissions and Long Term Care Insurance claims, these conditions are watched and studied by underwriters closely. The long term care insurance under-writing's main goal is to filter out applicants who pose a high risk of requiring long-term care. You want to buy from a company who does a good job at the underwriting of long term care insurance policies because if they let in too many higher risk people then those people will file claims and cause your premiums to go up.
Some Long term Care Insurance carriers offer more favorable rates for married couples over singles, because married couples tend to have better claim experience because they can watch out for one another. These types of details vary from company to company so be sure to shop around and look at a few carriers. LTCtree works with them all so fill out the form below and we'll mail you your quotes today.
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