Does a Longer Elimination Period Guarantee Savings?

Apart from the maximum benefit amount and maximum benefit period, the long term care elimination period is another important aspect of your long term care insurance (LTCI) policy which you should not overlook.

Some people make the mistake of calculating their LTCI policy’s maximum benefit amount and coverage period perfectly to avoid big out-of-pocket expenses, then they take its other features for granted thinking these are only secondary and won’t affect their coverage.

What buyers have to understand is the fact that all of the features of an LTCI policy are pertinent to a specific type of coverage. Skipping one will affect their eligibility for benefits, so it is important that they weigh everything from their maximum benefit amount, benefit period, down to the inflation protection rider and elimination period before finalizing their coverage by signing their policies.

Like the maximum benefit period, you should also estimate your policy’s elimination period carefully as this will have consequential impact on your nest egg or finances. Elimination period is also referred to as the waiting period and during which the insured individual is expected to pay for all the LTC services that he acquires using his personal resources.

Your elimination period can be short or long. Most insurance companies offer 30 days as the shortest waiting period and 365 days or one year as the longest. If you will select a shorter waiting period this will equate to a higher annual premium but a longer one will reduce your premium rate.

Practically all LTCI buyers are after lower premiums so they think going for a longer elimination period is the best option. On one hand, this may seem ideal but on the other it has its disadvantages.

How Long is a Long Term Care Elimination Period?

Choosing a longer elimination period for your LTCI policy is a good way to cut back on the price of your coverage. However, if you have limited assets this is not recommended.

Before telling yourself that a long waiting period is good for you, assess your total assets first. Include in your assessment the amount of retirement money that you are expecting and your entire nest egg. If you run a family business or perhaps you plan to take on a freelance job after retiring, compute your expected income.

If your total assets exceed your anticipated cost of care, then no doubt you can afford to go for a longer elimination period. However, if you think you will run short of money after six months of in-home care then you’re better off with a shorter waiting period.

Now before you conclude that a short waiting period will increase the price of your coverage and rip off all of your resources, take your age into account. If you’re 50 or younger there is no reason to fear the price of a potential LTCI policy because you’ve got big chances of locking in the preferred health discount.

Just like the other factors of your policy your choice of long term care elimination period will determine the success or failure of your coverage.