As healthcare is improving, we are living longer than previous generations. This has resulted in an increase in the need to care in old age for a long period of time. This care is called Long-Term Care. Paying for this care is expensive and can have a huge impact on finances and savings. Long-Term Care insurance policies are designed to pay for some of this cost. Long-Term Care can be paid through self-funding, long term care insurance, annuities, life insurance, and Medicaid.
Amount of Coverage & Benefit Period, the amount can be set in terms of Daily Limit and Lifetime Maximums and period that the policy is designed to cover.
Elimination Period is the length of time the insured will have to pay for long-term care services before the Long-Term Care policy will start to pay their percentage of costs.
Activities of Daily Living (ADL) include bathing, continence, dressing, eating, toileting, transferring. When the policy holder is not able to perform two of these activities or is diagnosed with cognitive impairment, the policy can be activated.
Informal Long-Term Care is usually delivered by family members and friends in the person’s home.
Formal Long-Term Care can be provided by a health professional in the person’s home or in a facility such as a nursing home, an assisted living facility, or an adult day care.
Inflation Protection uses interest rates to increases in the amount of coverage so that the benefits of the policy can keep up with inflation and the rising cost of medical care.
Return of Premium may return some or all the premiums to the insured or their beneficiaries if the policy is never used.
Partnership Plans are designed to help the insured keep assets that would otherwise be subject to the Look-Back period if they are receiving Medicaid coverage. Assets equal to the amount of Long-Term Care policy coverage are exempt from the Medicaid spend down requirement.
Hybrid Long-Term Care, these combination long-term care and life insurance policies can provide an amount of money for Long-Term Care, if Long-Term Care benefits are used, it reduces the death benefit of the Life Insurance policy. If the policy is never used for Long-Term Care, the death benefit remains untouched.
Life Insurance, many life insurance policies have a living benefit that the insured can access if they suffer from a Chronic or Terminal Illness. There is usually a reserve amount so that a death benefit is preserved.
About two-thirds of the US population over the age of 65 will need some type of long-term care.1
Long-Term Care insurance facts: 2
- 76.4% of long-term care insurance buyers were between the ages of 50 – 69.
- 3-years is the most popular Benefit Period,
- Claimants: Women 64%, men 36%.