| |
|
Daily
Benefit
The daily benefit you select is the maximum dollar amount that the insurance
company must pay for your care on a given day. Some policies pay this
benefit out as a weekly or monthly benefit, which allows you to receive
benefits for expenses greater than your daily benefit. These benefits
are paid regardless of other benefits you may have from other insrance
policies.
The daily benefit ranges from $40 to $500 per day depending on the carrier.
If you are purchasing a reimbursement policy, most companies will allow
the amount of the daily benefit that you did not use to be carried over,
which extends your benefit period. For example, if your daily benefit
amount was $150 and your expenses were only $100, then the remaining
$50 would be carried over to be used later. This would therefore allow
a three-year plan to last longer than three years! If you purchase an
indemnity policy, the carrier would pay you the entire daily or monthly
benefit regardless of the cost of your care. However, some indemnity
policies require some care each day to receive any benefit for that
day. Also, some reimbursement policies have optional indemnity riders
allowing you to convert them to an indemnity policy.
Home
Care Benefits
This benefit provides for home health care professionals to provide
care in your home. This includes skilled professionals like registered
nurses and licensed therapists as well as homemaker services. Adult
day care benefits are usually included also.
The home health care benefit the carrier will pay is usually based on
a percentage of the daily benefit. For example, if you choose a 100%
home health care benefit, you would receive 100% of the daily benefit
you selected for services in your home. The choices vary by carrier,
but some other examples are 75% or 50%.
Benefit
Period
The benefit period you select is the maximum amount of time or money
that you are purchasing. When you select a benefit period, it is expressed
in years. This can range anywhere from one year to unlimited years (lifetime
coverage). Usually, the benefit period is multiplied by the daily benefit
you chose to equal a lifetime maximum, or pool of money to pay for your
care. For example, if you purchased a three-year benefit period with
a daily benefit of $100, this would give you a pool of money (lifetime
maximum) of $109,500 (1,095 days X $100).
• The
more assets you have, the shorter the benefit length required.
• If
you have a family history of Alzheimer's or simply longevity, you may
want to consider unlimited benefits. Alzheimer's patients have been
known to require care for more than 20 years.
Deductible/Elimination Period
The deductible is also known as an elimination period. This is similar
to the deductibles you are used to in other types of insurance you carry.
Examples of deductibles available are: 0, 20, 30, 60, 90, 100, 180,
365, or even 730 days. When you choose your deductible you are agreeing
to pay for any charges during those days. The longer the elimination
period, the lower the premiums. But remember, the lowest premium is
not always the best purchase.
• The
more savings/assets you have, the longer the elimination period you
can get by with.
• The
younger you are, the more important it is to consider the FUTURE cost
of the deductible, since the cost of long-term care is projected to
increase tremendously. It may be more cost effective over the long run,
to select a shorter deducible.
• Choose
a policy that only requires you to meet the elimination period once
in a lifetime.
• Usually,
the younger you are the smaller the premium savings because of a longer
elimination period, but your future exposure could be dramatic 20 or
30 years from the time of purchase if you assume an extra 60 days of
risk (the difference between a 30 and 90 day elimination period; for
example).
Inflation
Protection
When you purchase long-term care insurance, you will want your policy
to stand the test of time. The costs of long-term care are going to
continue to increase just like they have done in the past. In fact,
over time, the costs of long-term care can double or triple what they
are today. Depending on the state that you live in, you will have several
choices of inflation protection options. The two most common are 5%
compound and 5% simple inflation protection. These options increase
your benefits over time, but your premiums are designed to stay level
for the life of your policy. If inflation for long-term care runs five
percent annually, a nursing home that now costs $110 per day will be
charging more than twice as much a day in 14 or 15 years. Without this
protection, your policy will cover less than half of your care costs
at that time.
• If
you are 70 years or older, 5% simple increases may be sufficient
• If
you are younger than age 70, compound increases make more sense because
it will increase the benefit amount faster and to a greater degree in
the long run.
[Get YOUR Free Consultation]
[ main page ]
|
