Hi there! It is a pleasure to have you on this blog.
Incase you're looking to read on other insurance articles like life insurance, health insurance and others, do well to check the previous posts on this blog or preferrably, click on the titles and you will be redirected to the articles i made on them respectively.
Now, let's talk about what this article is made for.
This article is specifically designed to give you info on Long-term care insurance, incase you have it in mind to purchase the insurance policy for your parents, or an elderly person.
So, I'll be briefly talking about;
• What is Long-Term Care Insurance?
• How Does Long-Term Care Insurance Work?
• Types Of Long-Term Care Insurance
In my next writeup, I'll expanciate further. For now, let's understand the above topics.
Let's get it.
WHAT IS LONG-TERM CARE INSURANCE?
Long-term care insurance is a type/form of life insurance policy that offers coverage for the provision of specified health services that include home-healthcare, nursing-home care, personal or adult daycare specifically for people within the age range of 65 or older or people with a chronic medical condition that require medical supervision and other related health services.
This type of insurance policy, unlike many assistance programs, offers tons of options and wonderful flexibility, including, Medicaid.
You'd surely have wondered why i said you might want to get the policy for elderlies earlier.
Well, that's because this policy is designed and is for elderly people. For younger individuals with disability, it is applicable also.
HOW DOES LONG-TERM CARE INSURANCE WORK?
If you visit an insurance company and request to purchase a Long-term care insurance plan, you will be given an application form to fill out and also, you'll be asked health questions too.
The insurer will interview you and may ask for your medical records also.
Then you can freely choose the amount of coverage you desire. By so doing, the company will calculate the sum of premiums you are to pay.
Once your application is approved and the policy was successfully purchased, you begin the payment of your premiums.
Most long-term care insurance companies also payout 'benefits' to the insured, only if the insured is suffering from dementia or isn't able to perform at least two out of the daily activities.
What are these "daily activities"?
They are;
- Eating
- Taking a bath
- Getting dressed
- Getting out of bed
- Visiting the Toilet
And others.
The picture below depicts the calculation of a long-term care insurance plan of individuals based on their age.
Most long-term care policies also practice the "elimination period". This requires that the insured pays individually for the long-term care services for a specified amount of time, probably within the range of 60 or 90 days before any reimbursement is made for a care.
In the case of an insured person needing care and the person wishes to make a claim, the insurance provider makes sure to review medical records from the insured's doctor and sometimes, may send a professional nurse to check and do a total evaluation.
The essence of all these are just to confirm that the insured really has a medical condition.
So, in short, before approving the claim filed by the insured, the insurance provider must approve the plan of care.
Once the eligibility to receive benefits has been reached, the policy will commence the payment.
Some policies also pay up to a limit daily for care up until the insured's lifetime maximum is reached.
Couples can also get shared options, as some companies offer it if both partners buy their policy.
On this option, a partner is allowed to take from his/her partner's benefits if he/she happens to reach the limit on his/her policy.
In summary, this feature allows couples to share the coverage between themselves.
TYPES OF LONG-TERM CARE INSURANCE
In existence, there are only two main types of long-term care insurance policy.
They are;
1. Stand-Alone Long-Term Care Insurance Policy(Also known as Traditional Long-Term Care Insurance)
2. Hybrid Long-Term Care Insurance Policy (Also known as Asset-based Insurance Policy)
I'll be talking briefly on them.
1. Stand-Alone Long-Term Care Insurance Policy: This policy has been available and in perfect use for over 40 years.
It is one of the policies that offer and provide the most affordable and 'straight to the point' solution in the course of paying for long-term care costs.
Like i stated earlier, this is the type of insurance plan that reimburses the cost of care of the insured if they require assistance to carry out daily activities, or they are suffering from a cognitive impairment disease.
There are also a few features of this insurance plan that I'd like to share.
They are;
- It supports the payout of 'monthly benefits', which can range from $2000 to $15,000 per month - this is usually based on the insurance company.
- Elimination period is also an important feature in this insurance plan. The duration of this period usually lasts within 1 to 365 days. - Depending on the insurance company.
- Period Of Benefits is also present in this insurance plan, as the company cannot continue paying the insured for eternity. LOL. Well, depending on the company, these periods last for about 2 - 6 years.
- Add-on Riders are present in this plan also.
One with great benefit is an inflation protection rider.
This one helps in improving your monthly benefit, thus making it easier for you to keep up with the high costs of living.
2. Hybrid Long-Term Care Insurance policy: In this type of insurance policy, two types of coverage are combined. In the sense that it is possible for you to have a life insurance and a Long-Term care Insurance rider. In the case of you having a Life insurance policy already, a repurposement can be made to add a hybrid long-term care insurance rider. Also, there will be no limit whatsoever in the plan, as the rider will still include the same basic components of independent plans.
Even though they haven't perfectly been in use like normal independent plans, they are growing in quality and popularity.
I've compiled a few advantages of this insurance plan. Keep scrolling to see.
- Two purposes with one policy - In the sense that both life insurance and long-term care insurance takes the total value of the policy. An example is if an insured person has a hybrid plan, with the benefit totalling on $600,000 and he/she used $300,000 in the course of long-term care coverage, the balance, which is $300,000 will be paid to the insured beneficiaries as a death benefit just the way any other permanent life insurance benefit would.
- No increment in premiums - There is no increase guaranteed pertaining to your premiums on this plan.
- Premiums Refund - In the case of you needing funds for urgent issues, as long as you have many plans, you can get some or all of the premiums you've paid once you cash in the policy.
- Payment Flexibility - This simply means you can choose whichever way you desire to pay your premiums. Whether Lifetime payments, Single payments (in a lump sum), or 20 annual payments.
