The Five Top Elements of a Long Term Care Insurance Policy..

There are really only five major elements to understand when considering the purchase of long term care insurance protection. These elements will help you craft a policy that provides meaningful protection, whether you need care and make your claim soon after purchase or decades in the future.

#1 Daily Benefit
The daily benefit is the limit that the policy guarantees to pay you for covered services once your claim is approved. Most companies define the value of a Long Term Care insurance policy by multiplying the daily facility benefit by the number of days in the benefit period. A policy with a $200 daily facility benefit, and a three-year benefit period (3 years x 365 days = 1,095 days), is worth $200 x 1,095, or $219,000. This is most often most often referred to as the “pool of money”.

#2 Inflation Protection
Today’s care cost is only a benchmark, because the cost of care will inevitably increase over time. Buying your policy with inflation protection is clearly very important. A Baby Boomer may not make a claim against the LTC insurance benefits for 30 years or more. Five percent compound inflation protection is the best inflation protection available, and is most highly recommended. A policyholder must self-insure (pay for) any shortfall between an insurance policy’s benefit and the actual care cost.

#3 Elimination Period
This elimination period is similar to a deductible, and it means the number of days before the policy starts paying a benefit.

#4 Benefit Period
The benefit period is the number of years that the policy will pay after any elimination period has been satisfied.

#5 Return of Premium
What happens when LTC insurance premiums are paid for years, and a policy is never used? You can purchase a policy with a return of premium rider. Return of premium terms vary among contracts. A traditional return of premium rider refunds, at death, the total premium paid over the years less any claims, and some policies even return premium regardless of claims. Knowing that premium payments can be refunded is reassuring to many consumers.

Focus on the five decisions above to design a policy that meets your needs and circumstances. The purchase of LTC insurance involves buying a pool of money to pay for long term care. Don’t get distracted by side issues.

When you want to move ahead to get comparative quotes, then connect with the Buyer’s Advocate.

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