Statistics show that at least 6.4 million people aged 65 or older need Long-Term care, with one in two over age 65 requiring care. At least half of the population who are 65+ will need help with Activities of Daily Living.* Such care is provided when someone can no longer independently carry out essential everyday activities like eating, bathing, dressing, etc. Most people think of Long-Term care as something needed by older people, but accident or illness can strike someone of any age. When it does, they too may find themselves in need of assistance.
Guidelines for Shopping and Selecting the
Right Long-Term Care Insurance Policy
When selecting a long term care insurance policy or getting a long term care insurance quote, it's important to look for a policy that not only you can afford but also meets your needs. There are many insurance policies covering Long Term Care available today. Policies can vary widely in terms of benefits they'll offer, terms of the contract, and features. Choosing the right long term care insurance policy is not simple.
Using the guidelines below along with the expertise of a long-term care insurance specialist, you will have an easier time understanding the nuances of the long-term care insurance policy. It is important to understand the different options available and how they differ from company to company.
Care Settings:
There are 3 main types of policies:
1. Home Healthcare Only,
2. Facility Care Only
3. Comprehensive (this is a combination of the two).
Home Health Care Coverage, for example, means you receive insurance benefits covering in-home care services provided by a licensed or registered practice nurse or therapist. Respite Care guarantees a facility will offer some help about one to two weeks each year to those caring for a homebound person. Adult Day Care can also help, ensuring assistance is provided during the day for recreational, therapeutic and personal care. When looking at policies, make sure the care settings are what you want and that you are comparing apples to apples.
Inflation Protection:
1. No inflation benefit - The Daily Benefit never grows. It remains the same for the life of the policy,
2. Future purchase option- You have a limited right to periodically increase your Daily Benefit. When you choose to increase your Daily Benefit you do not have to prove that you're still healthy. When you choose to increase your Daily Benefit, your premium will go up because you are buying additional coverage,
3. Automatic Inflation Benefit- Your Daily Benefit automatically grows each year by a certain percentage which you choose when you purchase the policy. The automatic increases in the Daily Benefit each year do not make the premium go up. There are many different types of Automatic Inflation Benefit. The most common are 5% Compound, 5% Simple and 3% Compound. .
Daily Benefit:
How much will the policy pay for each day that you receive qualified care? When comparing policies, make sure you understand how much of the Daily Benefit is available for each care setting. Some policies may pay a smaller percentage of the Daily Benefit for care that is received at home or in an assisted living facility.
Benefit Period:
How long is the policy designed to pay benefits while you qualify to receive benefits? It is sometimes described in terms of dollars or a pool of money, sometimes in terms of years, and sometimes in terms of days. It is similar to, and sometimes referred to as, the "Lifetime Maximum Benefit". The most commonly offered Benefit Periods are 3 years, 5 years, or Lifetime/Unlimited. A 3-year Benefit Period means that if you use up all your Daily Benefit each day, your policy would run out of benefits after you've been on claim for 3 years. A Lifetime/Unlimited Benefit Period means that the policy could never run out of benefit.
Elimination Period:
This is similar to a deductible and is called the "Elimination Period". It is the number of days that you receive qualified care before the policy will start to pay benefits. As with any insurance policy, the higher the deductible, the lower your premium. The most common Elimination Periods that are offered are 30, 60, or 90 days.
Levels of Care:
You should be able to receive skilled, intermediate or custodial care. Skilled care, for example, is the highest level an individual can receive outside of hospital confinement and requires constant medical attention from licensed medical professionals under a physician's supervision. Intermediate care, which is handled by a licensed practical nurse, involves occasional nursing and rehabilitative care. Custodial care is the lowest level of care. It is non-medical care that helps with individuals with the activities of daily living, preparation of food, administration of medication and household chores.
Avoid Polices with a Company Requirement:
Make sure your policy does not require hospitalization before benefits are paid. Preferred policies will require the insured to be unable to do two of the "activities of daily living" rather than rely on a "medically necessary" standard.
Select Highly-rated Policies:
Financial strength is important, helping determine the insurers long-term survival and whether they can pay future claims. Look for a company that has an A+ rating from A.M. Best Co. and a triple A rating from at least one other service. Policies from the same insurer vary from state to state, so verify the information is appropriate for your particular region.
Front End Underwriting:
Front end underwriting requires an attending physician's statement at the time of application and can help protect against claim denial due to underwriter mistakes. Expect the procedure to take up to a month and a half.
Guaranteed Renewable:
Guaranteed renewable means the insurance company cannot drop the policy unless you skip payment, but premiums can be raised for all policyholders within a particular group
These are just some options to consider when evaluating long-term care insurance policies. Long-term care insurance is more complicated than life insurance or health insurance, so it's best to consult with a Long-Term care insurance specialist.
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