Long Term Care Insurance

What is Long Term Care Insurance?

Long term Care insurance (LTC or LTCI) is an insurance product designed to provide financial support to pay for long term services and supports necessary to meet health or personal care needs over an extended period of time. Long term Care Insurance covers care where health Insurance and other Medical insurances fail to provide the kind of services required.

What includes in a LCTI?

It includes personal and custodial care in preferred settings such as your home, a nursing home, a community organization or other facilities. Individuals who require such long term care are not sick in the traditional sense but require assistance in the activities of daily living (ADLs) such as dressing, bathing, eating, walking, using the toilet, maintaining continence and moving from place to place within the living environment and for people with cognitive impairment, such as Alzheimer’s disease or other forms of dementia. In other words, the focus of long term care is on caring, rather than curing.

Why one should go for LTCI?

This insurance is essential for everybody because age is not a determining factor in needing long-term care and long term care is usually very expensive hence can deplete ones life’s savings. Premium for LTCI varies depending on the time at which the insured takes up the policy. Hence a low premium is locked for the life of the policy if taken up early in life. Also, some insurance carriers provide the early policy takers the option to have the premiums returned to the beneficiary if the insured never uses the policy. Hence, the price of LTCI depends on your current age, the amount of coverage, the services you opt for and the carrier. However, premiums paid on long term care insurance may be eligible for an income tax deduction.

Eligibility for Benefits

Benefit triggers is the term a company uses to describe how, when and why to pay benefits to the insured. An insured can qualify for covered benefits with most plans when he/she needs help with a certain number of activities of daily living (ADLs) or can’t pass certain tests of mental function. Most policies have a waiting period or elimination period where you pay for care before the benefits are paid. The longer the elimination period the lower is the premium. Prior hospitalization is not required before you can receive benefits; it only impedes your ability to qualify for benefits.

Types of LTC insurance policies:

Reimbursement Policies – This is the least expensive and the most effective and efficient policy where they reimburse some or all of your long term care expenses up to your allotted daily, weekly or monthly limit.

Indemnity Policies – Remunerates the eligible benefit recipient for the designated daily, weekly or monthly amount against qualified expenses incurred. Indemnity amount is received for the actual days care. This policy is well priced and more flexible than reimbursement plans since proof of care is required.

Income Policies (Cash or disability Plans) – This is the most expensive and remunerates the designated daily, weekly, or monthly limit to eligible claimants, whether or not the services are received, once the insured’s eligibility is established. Monthly cash payments are made with no requirement to produce proof of care provided, hence, most flexible.