1. Who needs Long-Term Care Insurance?

Most of us need Long-Term Care Insurance, but few of us buy it. Put another way, anyone who has assets to protect needs Long-Term Care (LTC) Insurance. Given the high percentage of people who will find their way to a long-term care facility, most of us would like to accomplish at least these three things:

1. We want to make sure we have money for a decent facility;

2. We want to make sure that our spouse remains comfortable;

3. We want to preserve as much of our estate as possible for our children.

If you want to make sure, then insure.



2. Do I have to insure the entire cost of long-term care?

Of course you don't. That is where financial planning comes into play. Your estate and income may be generous enough to bear part of the cost of long-term care. LTC is purchased in $10/day increments, You can fund as much as you wish.



3. What is the difference between reimbursement and indemnity policies?

A reimbursement policy will reimburse the charging insured facility for the amount of their charges up to policy limits. An indemnity policy will pay the entire benefit to you. If the facility charges are less you keep the difference. Some companies will allow you a choice between reimbursement and indemnity policies. A policy with indemnity provisions will cost a little more.



4. What are some of the riders offered by LTC companies?

Some of the common riders follow:

• Waiver of premium rider — This rider will waive the policy premium should your policy trigger and benefits are paid.
  
  
• Inflation rider — This is likely the most important of riders. Inflation riders increase the policy limits as the years pass so that the value of the policy keeps pace with the current cost of care. The most common are 3% and 5% inflation riders. This is an expensive rider but well worth it, especially for age 75 and below.
  
  
• Return of premium rider — This rider will return your premium to you if you reach a certain age and have not used the policy. It is usually very expensive.
  
  
• Indemnity rider — will change your policy from reimbursement to indemnity pay. (See above.)

5. Why are LTC policies complex?

LTC policies have quite a few variables. The above riders are included in those variables. Elimination periods and benefit periods make them even more complex. That is why you need a trustworthy and knowledgeable agent.



6. What is an elimination period?

An elimination period is sometimes called a waiting period. It is the length of time between the policy trigger and the payment of benefits. Elimination policies range from 0 days, 30 days, 60 days and 90 days to 180 days. Once you are declared by your physician to have met the requisite inability to perform ADLs (activities of daily living), your policy will trigger. At that point the elimination period begins. Once you have met the elimination period your benefits begin accruing. Needless to say, policies with shorter elimination periods are more expensive.



7. When do I receive the first benefit payment?

Most companies will send the first benefit payment the first of the month following completion of a month after the completion of the elimination period. In other words, say you have selected a 90 day elimination period. Once you are declared to have met the ADL requirements your elimination period begins. Ninety days after that your benefits begin to accrue. The first of the month following that date the company will send the first month by payment. Benefits are always paid in arrears because there is no way for a company to know how long an individual will be in a facility or in need of home health care.



8. Can we purchase a policy together as a couple?

Yes, most companies offer substantial discounts for their two-party contracts.