Long Term Insurance Defined

Private insurance companies usually sells LTCI policies to offset the costs of long term care. LTCI is just like all insurance policies that requires premiums to help recipients avoid paying large sums later on in the event of an illness or a catastrophic event. Premiums are based on the individual’s age at the time of purchase and are usually locked in for the life of the policy. LTCI covers the following, {depending on the policy you choose: and is dependent on the policy that you choose:}

1.Care in a skilled nursing facility

2.Care in an assisted living facility

3.Home health care

4.Adult day health care

Buying a LTCI policy allows the policyholder to choose from many options, such as the amount of the daily benefit, the number of years the policy will pay benefits, and, after the applicant qualifies for a policy, the number of days or months before the policy will begin paying benefits.

It is imperative to evaluate the policies carefully to see which of them offers the benefits you require with a premium that fits your budget. Policies differ in their benefits, contract conditions, deductibles and premiums. It is also important to consider the rising cost of health care. Always make sure that the LTCI inflation protection for benefits to increase as health care costs continue to rise. Policies are labeled according to the place in which their benefits are paid.

Take note that homecare only policies pay for care at home and in an adult day care or adult day health care facilities. Make sure the policy includes both types of day care. Facility-only policies pay for care in a skilled nursing facility and in an assisted living facility. These comprehensive policies pay for care in a skilled nursing facility, assisted living facility, adult day care or adult day health care facility, and at home.

Since LTCI claims are always paid many years after the purchase of the policy, it is imperative to check the following:  The financial strength of the company. Some of the industry’s major rating services are A.M. Best , Duff and Phelps, Moody’s, Standard and Poor’s and Weiss Ratings . Reputation and claims-paying history of the company. Contact your State Insurance Department for information on specific private insurance companies.

The applicant must be healthy at the time of the application. Each insurance company has individual requirements and/or limitations. Not sure when is the right time to buy an LTCI policy? Or how to assess what you will need from a policy? Visit our Expert Column on Financing Long Term Care to find out more.

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