As many of my
clients are getting older, long-term care is a concern that many of us may face
sometime in our life, either through the care of our parents or through the
care that we may need in our lifetime. For anyone over the age of 65, there is a one in two chance of needing long-term
care. The cost of care is
approximately $50,000 per year. With
these statistics, it is pertinent that we plan for long term care. The most cost efficient way is to purchase a
long-term care policy. When shopping for
a policy, it is very important to understand the definitions associated with
the insurance policy. Be sure to
research the company that you are choosing a policy from. Carriers may define how they pay claims
differently. If you have any questions,
or would like to explore a long-term care policy, please call my office.
Some
definitions to be familiar with:
Daily
Benefit: The amount of insurance benefit in dollars a person
chooses to buy for long-term care expenses.
For example, a person may choose a plan that pays $150 per day or $1050
per week.
Length
of Care: The duration of time that the insurance policy will cover
care.
Pool of
Money: The total amount the policy will pay for the life of the
policy. This is calculated by the
choices made when purchasing the policy.
Pool of Money = Daily Benefit * Length of Care* 365. For example, if the
daily benefit is $150, length of care is 6 years, the pool of money would equal
150*6*365 = $328,500.
Waiver
of Premium: A provision in an insurance policy that relieves the
insured of paying the premiums while receiving benefits.
Elimination
Period: A type of deductible; the length of time the individual
must pay for covered services before the insurance company will begin to make
payments. The longer the elimination
period in a policy, the lower the premium.
For example, if you choose a 90-day elimination period, you would have
to pay for 90 days of care before the policy would start to pay the costs for
care. Each insurance carrier defines how
these 90 days are fulfilled. The company
may require consecutive days or may give you a time period to fulfill those 90
days.
Inflation Protection: A policy option that provides for increases
in benefit levels to pay for expected increases in the costs of long-term care
services. Many companies give you the
option at purchase to choose inflation protection, or increases of simple
interest or compounded interest.
There are many
other bells and whistles that can be added to a long-term care plan. We can decide together if they are
appropriate for you. Please call me for
more information.