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Long Term Care Insurance Policy Benefits |
Home Health CareMost of the newer long term care insurance plans sold in the past 10 years offer home health care. Make sure your plan does and that it will pay 100% of you daily or monthly benefit amount. Also make sure you long term care policy will pay for custodial and skilled home health care. There are some policies that will just pay for skilled care. Genworth Financial in our opinion has the most rich home health care plan. The home health care aid does not have to be licensed and will pay for things like cooking, light housekeeping, laundry, etc. Some other plans require you use a home health care aid that is licensed with the State or works for a home health care agency.
Facility Care Coverage in Nursing Home or Assisted LivingAll long term care insurance policies will cover facility care at either a daily or monthly rate in nursing home and assisted living facilities and the benefits cover room and board, skilled or custodial care in a facility.
Benefit PeriodThe benefit period is how long benefits will last and that depends the number of years of coverage you may choose. Most companies will offer plans of 2,3,4,5,6,10 years, or unlimited (lifetime) coverage. 92% of all long term care claims lasted 3 years or less according to Genworth Financial's claim department. (The are the #1 provider as far as in force policies.) So most people choose a plan that will cover at least that amount of time.
Automatic Inflation Protection Automatic inflation protection is the most important long term care insurance riders because it keeps your benefit in pace with inflation and protects you purchasing power. There are 3 types of automatic inflation protection: 5% compound inflation protection, 5% simple inflation protection or sometimes called 5% equal inflation protection, and future purchase option or CPI inflation protection and that particular rider gives the policy holder the option to buy more coverage in the future without having to prove insurability. There are a handful of companies that will offer 3% or 4% compound inflation protection but be sure to remember that medical costs typical rise faster that core CPI. More details on inflation protection can be found here.
Elimination Period is also know as your DeductibleThe elimination period is the time a person has to pass before the long term care insurance will kick in and pay benefits. Most companies offer a 0, 20, 30, 60, 90, or 180 day elimination period. The longer the elimination period the lower your premium will be. The definition describing the elimination period varies with the different long term care insurance companies. Most policies will require the elimination period to be satisfied in a certain period of time while a few others may require the elimination period to be consecutive days of care. Be sure to read and understand the elimination period in your long term care insurance policy because the contract will not pay until the deductible has been satisfied.
Maximum Policy Value or Pool of MoneyYour policy will list a maximum total policy value in dollars and that is the amount of liability the insurance company is on the hook for. Some long term care insurance policies call that their "pool of money." A pool of money long term care insurance policy will let you stretch the benefits years if you do not take out the maximum daily or monthly amount.
For example a $100/day policy for 3 years value or pool of money is $109,500. If you religiously pulled out $100 a day each and every day you would exhaust the policy. However, if you pulled out less say $50/day your policy will not last just 3 years, but 6 years because you were pulling out half the maximum amount.
Indemnity Long Term Care Insurance Payment – Under this option, the long term care insurance company will send you a check for the policies full daily or monthly benefit regardless if the actual expenses were less. If there is extra money left over than you can spend it anyway you see fit.
Shared Benefit Coverage for CouplesThis optional rider allows couples to share each other's benefits. If one spouse needs long term care and runs out of money in their policy, they then can dip into their spouse's policy and start to use their benefits.
Waiver of PremiumWhen you need long term care the last things you need to worry about is paying the premium for your policy. Most of the top companies will waive your premium once you go on claim and start receiving benefit.
Return of Premium BenefitThis benefit is a rider that some companies offer that will return all or a portion of the long term care insurance premiums paid back to your beneficiary at your death. There are different options available with this rider depending on the company so be sure to ask questions and look at several companies.
Survivorship BenefitThis long term care insurance rider is for couples and depending on the option when either 7 or 10 years passes if not claims had been paid when one spouses dies then the other spouse has full benefits and never has to pay premiums again.
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