Choosing the Right Long Term Care Insurance Policy

Buying long term care insurance policy is unlike shopping for a new furniture piece, a signature clothing, or a car; instead, it’s like choosing a spouse.

You can replace a home furniture, clothes get worn out, and cars eventually become outdated. However, a long term care insurance (LTCI) policy which bears your signature cannot be substituted with another anytime that you want to.

For example, you purchase a reimbursement LTCI policy today with a maximum daily benefit amount of $150 for a period of three years. Say after 30 years of paying the premium of your coverage, you met your policy’s benefit triggers and you simply complied with the stipulated waiting period of your policy before you started receiving your benefits.

At the onset of care you had to stay in a nursing home for five consecutive months. When your condition got slightly better you realized that you can manage to stay at home and receive assistance from a home health aide, but then you found out that if you go home your LTCI won’t pay for your in-home care expenses.

Reimbursement policies would normally require policyholders to submit official receipts from their care providers before they can receive their benefits. These receipts or official billing statements will be the basis of insurers in computing the benefits that they will pay out to insured individuals.

There is another type of LTCI policy and this is known as the indemnity plan. This type of policy pays out the exact amount of one’s maximum daily or monthly benefit regardless of his actual expenses on care. In addition to receiving a fixed amount from his policy, a person who owns an indemnity plan is free to receive care in his preferred LTC setting, from whoever he is comfortable with, and however he wants to.

Buying Long Term Care Insurance Policy

Your age, health and total assets are important determinants of the LTCI policy that you should buy. Individuals whose family has a health history in a debilitating illness such as cancer, cardiovascular disease, and cognitive problems like Alzheimer’s should look at policies that include nursing home care as their chances of requiring this level of LTC are big.

Aside from your present health condition and your family’s health history, you also have to consider the cost of care where you live to be able to compute accurately the maximum daily benefit amount which you expect to receive from your policy. If the rates of LTC facilities or services in your area are very high it does not mean that you have to go for a big benefit amount right away. You can start with a small amount but then don’t skimp with your policy’s inflation protection rider. You ought to consider the 5% annual compound inflation protection so that your initial benefit amount will double in 14 years’ time.

Buying long term care insurance policy is not simple as it entails a lot of weighing. Better start looking at your options as early as you can because if you cram afterwards, you might end up with a coverage that is nowhere near what you need.