Posted by on Sep 11, 2017 in Articles | 0 comments

Understanding Long Term Care Policies

Only about 10% of the senior population have Long Term Care Policies, yet 90% or greater of 65+ years old will need some form of Long Term Care.

As a Senior Living Advisor, I assist my clients in reviewing their Long Term Care Policies to determine if they are currently qualified to use the benefits of their policy or when they will be qualified to use the benefits which they have paid into for many years.

It is common for many of my clients to not know where their original policy is and also not recall what their policy covers. Upon reviewing their policies with them they are usually surprised to find out their policy covers more or less than they expected.

Whether you are looking to purchase a Long Term Care Policy currently and would like to become educated or you would like to understand how to read your current policy here are some common features and provisions:

  • Elimination period: The period of time before the insurance policy will begin paying benefits (typical options range from 20 to 100 days). Also known as the waiting period. The Elimination Period can include a hospital stay, a Skilled Rehab stay, home care services and assisted living/memory care/foster care home stays.
  • Duration of benefits: The limitations placed on the benefits you can receive (e.g., a dollar amount such as $150,000 or a time limit such as two years and some policies are unlimited). Typically the higher the dollar amount or longer duration will increase your premium or monthly cost.
  • Daily benefit: The amount of coverage you select as your daily benefit (typical options range from $50 to $350).
  • Optional inflation rider: Protection against inflation. An inflation rider means that your benefits of coverage will increase annually by a percentage. It’s common with the policies I review to show a 5% annual inflation rider.
  • Range of care: Coverage for different levels of care (skilled, intermediate, and/or custodial) in care settings specified in policy (e.g., nursing home, assisted living facility, at home). Many policies written 1991 or prior have many definitions for skilled nursing that apply to assisted living, memory care and foster care home settings.
  • Pre-existing conditions: The waiting period (e.g., six months) imposed before coverage will go into effect regarding treatment for pre-existing conditions.
  • Other exclusions: Whether or not certain conditions are covered (e.g., Alzheimer’s or Parkinson’s disease). Some policies may not specifically address dementia or other forms of cognitive impairment, but if one’s cognitive impairment prevents them from being able to care for themselves (e.g., being able to prepare meals, take medications, take a shower, get dressed, use the toilet) it will qualify them to begin using the policy.
  • Premium increases: Whether or not your premiums will increase during the policy period. This can be very important as most of my clients took out their policies 10+ years ago. If the monthly premium or cost of the policy prior to using it goes up significantly each year it can become unaffordable over over time with regular increases. When my clients ask me if they should get rid of their policy after the premiums have increased to the point where it’s significantly impacting their monthly budget I like to sit down with them and look at their income, expenses and assets to determine whether it makes sense to keep the policy. Most of the time it makes more sense to keep the policy.
  • Guaranteed renewability: The opportunity for you to renew the policy and maintain your coverage despite any changes in your health.
  • Grace period for late payment: The period during which the policy will remain in effect if you are late paying the premium.
  • Return of premium: Return of premium or nonforfeiture benefits if you cancel your policy after paying premiums for a number of years.
  • Prior hospitalization: Whether or not a hospital stay is required before you can qualify for LTCI benefits. This is critical because if the policy states that a hospital stay is required before you can qualify to use the benefits, it could put you in a situation where you are at home needing services at home or services in a care facility, but unable to use the benefits because you do not have a reason to go to the hospital.

If you or anyone you know could benefit from having myself or one of our advisors review your Long Term Care Policy please contact us at or visit our website

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