Which LTCI Policy Is Right For You?

Before taking your pick from a list of long term care insurance policies there are various determining factors that you should consider.

Financial planners and long term care (LTC) professionals have foreboded that a fourfold increase in the cost of care is going to take place in 2030. Many of them shared that the five-figure rates of nursing homes will be converted into six figures when that time comes and a nest egg of $500,000 will only be good for a year.

They did not specifically say though which states will experience such drastic increase in LTC rates because the cost of care varies according to region.

The top three states with the most expensive nursing homes are Alaska, Hawaii and Massachusetts. In Alaska, you need to pay out $227,760 annually for a private nursing home room. In Massachusetts, families spend $125,925 yearly while in Hawaii it is $122,640. If you’re anticipating care 19 years from now a nest egg of $500,000 will not take you very far.
On the other hand, if you’re a resident of Louisiana or Missouri your $500,000 will suffice for at least two years of care as the rates of LTC facilities in both states are much lower than those in the northwest and northeaste
regions of the country.

After familiarizing yourself with the cost of care in your state of residence, assess your finances so you can figure out how much you are capable of spending for care and how much you can allot to the annual premium of a potential long term care insurance (LTCI) policy.

Weighing Long Term Care Insurance Policies

There are three general types of LTCI policies namely Reimbursement, Indemnity and those that comply with the rules of the Partnership Program.

Each of these LTCI policies is designed for a specific type of care. For instance, a reimbursement LTCI policy will pay the policyholder his exact amount of expenses on care up to his maximum daily benefit amount.

Reimbursement policies are ideal for individuals who are receiving care in an institutional or community-based LTC facility as this type of policy requires submission of medical bills or nursing home receipts before the insurer would reimburse the policyholder his expenses on care.

An indemnity policy, on the other hand, will pay the policyholder his maximum daily benefit amount as stipulated on his policy regardless of his incurred expenses on care. The policyholder can then use his benefits to pay his caregiver or a family member who took the initiative to take care of him.

Some indemnity policyholders even put away a portion of their benefit amount in the bank so that they have something to pull out n case of emergency.

Lastly we come to partnership LTCI policies which allow policyholders who have exhausted their benefits to apply for Medicaid assistance while protecting a portion of their assets that is equivalent to the benefits that they have received from their LTCI policy.

These long term care insurance policies have been laid out to provide an overview of the various benefits that you can receive from each. But it is not advisable to clinch a policy without giving it much thought as this can result in squandering so take some time to speak with your LTCI agent or perhaps request LTCI quotes online.