Each of these decisions can impact your policy premiums.
Daily or Monthly Benefit: Look at the average cost of care in your area and choose the benefit to closely match that cost. This is the daily benefit available for facility care. Purchase the highest benefit you can afford because health care inflation costs will erode your daily benefit.
Benefit Period: How long will the long term care insurance policy pay benefits?
There are two types of Comprehensive long-term care insurance coverage that consumers can purchase;
- Unlimited/Lifetime Benefit Periods - which mean that the insurance company will pay for as long as the client requires care. There is no limit to the length of time that they will pay.
- Specific Benefit Periods - which mean the consumer can chose the length of time they want the company to guarantee payments, i.e. 2, 3, 4, 5, or 6 years. These policies are proportionally less expensive than Unlimited/Lifetime type.
Elimination Period (deductible): Most people choose a waiting period of 90 days or less. The longer the waiting period, the lower the premium. With the costs of care tripling over the next twenty years, the difference you might save in premiums may not justify having to pay the first three months out-of-pocket.
Home Health & Community Coverage: 80% of all long-term care is delivered in the home. Most view a nursing home as your last resort, so be sure you have excellent home and community coverage. This benefit may be the very thing that keeps you out of the nursing home. With some policies this is a rider you can add and with others it is automatically included. Benefits are a percentage of your nursing home benefit, for example, 50%, 80%, or 100%.
Inflation Protection: It is important to address inflation protection within your policy. According to the General Accounting Office, long-term care costs are growing at 5.8% annually and are projected to triple in 20 years. Make sure the benefits are as good in the future as they are today.
There are generally two primary ‘types’ of Inflation Protection consumers can purchase;
- 5% Compound Inflation, which adds 5% to the benefit value based on the previous year’s attained amount.
- 5% Simple Inflation, which adds 5% annually based on the original amount only.
