Long-Term Care
Long-term care insurance is a policy that you can buy to cover the high costs of needing care should it be
an advocate at the hospital while you are a patient, assistance with care at home, nursing home care,
assisted living or additional support for the caregiver providing support. Not all policies are the same.
Three Types of Long-Term Care
- Skilled care: Continuous "around-the-clock" care designed to treat a medical condition. This care is ordered by a physician and performed by skilled medical personnel, such as registered nurses or professional therapists. A treatment plan is established.
- Intermediate care: Intermittent nursing and rehabilitative care provided by registered nurses, licensed practical nurses, and nurse's aides under the supervision of a physician.
- Custodial care: Care designed to assist with one's activities of daily living (such as bathing, eating, and dressing). It can be provided by someone without professional medical skills but is supervised by a physician.
Types of long-term policy designs.
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Traditional Long-Term Care
The lowest initial cost long term policy is also known as “traditional long-term care”. This type of policy is designed to provide benefits for the lowest initial cost but the price of this type of policy is not guaranteed to stay at that price. As the cost of care and the claims increase over time so does the price. We believe this type of policy should be designed to include a non-forfeiture rider to help keep what you have already paid for from disappearing because the cost of the policy has exceeded your budget and you can no longer pay for the policy. -
Asset Based Long Term Care
Asset Based Long Term Care aka Linked Benefit Long-Term care products are policies that offer guarantees and a death benefit. These policies are designed to help protect your assets and your family when paying for the cost of long- term care. The cost for this type of policy is more expensive because you are paying not only for the death benefit but also for the guarantee that your premiums will not change over time. The premiums are usually paid in a short period of time such as 1 year to 10 years. The death benefit is being paid out tax-free “while you are still alive” to help pay for long-term care costs. Many have a feature that will return your premiums if you decide you no longer want the policy and you have not used up all your benefits. You always have a benefit…..either long term care, death benefit or premium refund -
Life linked Long-Term Care
Generally this type of policy pays premiums for the life of the policy and includes a long-term care rider. Most of the long- term care features are pre-determined by the carrier. This is the most cost- efficient plan if life insurance is also needed. You decide what you want guaranteed…premiums and/or death benefit. This type of policy can have cash values for more flexibility to accommodate life changes. Some of these policies offer inflation protection and some do not.
Helpful questions to ask before choosing a long-term care policy include:
Is the insurer a high-quality company?
You want to be sure the policy you purchase will still be in business when you need the coverage.
Finding carriers that carry a financial rating of “A” or better with the following is a good start.
These company’s focus on reporting on the financial stability of insurers in the financial industry. Each
life insurance carrier also provides a financial report reporting their ratings from these for the public.
When comparing insurers’ ratings, keep the agency’s financial strength rating scale nearby for quick
reference; each agency has one on its website. The scale will list the agency’s ratings and what they
mean.
Does the product offer inflation protection?
As the cost of living and medical care continue to increase the cost of long-term care will also increase.
Be sure the policy is designed to prepare for these increased costs.
Is the benefit period adequate?
The benefit period is the amount of time that the life insurance company will pay for long term care
expenses.
Is home care included?
You will want to be sure your policy includes coverage for home health care. Some carriers offer to pay
for expenses for care at home by a family member and some will only pay expenses for care by an
agency providing the care at home. Be sure you understand the difference.
What is the elimination period?
Elimination period is like a deductible. This is the time you must wait to receive payment for long term
care expenses once your doctor has diagnosed you as needing help with at least 2 of the 6 activities of
daily living or if you are mentally not capable of staying safe alone. Some carriers offer a zero-day
elimination period for care at home yet require a 30, 60- or 90-day period for all other care in facilities
outside the home. Are the days counted toward calendar days or service days? Calendar days can allow
the policy to meet the elimination period faster than the service days. The longer the elimination period
the lower the cost of the policy.
