8 Things You Should Know About Long Term Care Insurance

Long term care insurance is a special type of insurance that can cover you financially in the instance that you require costly long term care. In this article, we will go over 8 things you should know about long term care insurance.

1. You Will Receive a Set Benefit

Your long term care insurance policy will have a maximum daily or monthly benefit. This is the maximum amount they will pay for your care during a set period. In addition to benefit limitation, you will also have a waiting period. This is usually a 90-day term that you will have to cover care costs during. After this waiting period passes, you will begin to receive benefits.

2. There is a Lifetime Cap on Benefits

These are two types of benefit caps your insurance company may have in place. The first is a time cap. This limits payment for your care for a maximum number of years, usually 3 to 5 years. Second is a payout limit. This is a cap on the total amount that the insurance company will pay out on your behalf. For example, this may be $165,000.

3. Insurance Can Enhance Government Benefits

Depending on the state you live in, you may qualify for Medicaid benefits after you reach your policy caps.

4. Premiums Will be Expensive

The premiums will be higher for female than male policy holders. This is because females have a longer life expectancy. For example, a policy for a 55-year-old male may be around $2,100 annual premium. Whereas a female for the same age will be around $3,600 a year. It is important to note that the longer you wait to purchase a policy the higher the premiums will be. However, once you sign your policy you are guaranteed level premiums that will not increase.

5. You Can Choose Partial Coverage

You can choose a policy with a lower benefit amount; this will result in lower premiums. Then you can choose to cover the difference out of pocket. Another cheaper option is a short term policy. These usually pay benefits for only a year.

6. You Will Be Required to Pass Health Underwriting

To avoid people only applying for insurance once care is needed, you need to pass health underwriting. You will need to meet certain minimum health requirements to qualify for a long term care insurance policy. One you pass the health underwriting your policy will be guaranteed renewable. This means you will not need another health exam. However, if you let your policy lapse you will need to pass a health exam again.

 7. There are Hybrid Products Available

There are products you can add long term care coverage to. These include life insurance and annuities. With life insurance you can add a rider that will allow you to receive payments from your death benefit to cover long term care. Whatever is left over will go to your beneficiaries; if there is nothing left your beneficiaries will not receive any payout. Annuities also have long term care benefit riders. These will provide you with a doubled monthly payment to help cover long term care costs. However, it may reduce your average monthly payments.

8. Provides You With More Care Options

Long term care insurance provides flexibility on the type of care you can receive. For example, you can choose to use the funds for a home health care worker or a nursing home.

Purchasing Long Term Care Insurance

If you feel that purchasing long term care insurance is right for you, you should meet with a qualified insurance agent who can help you find the best policy for your needs.

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