Age is an important factor in long-term care insurance
premiums. The older you are when you buy the
policy, the higher your premiums will be.
Once you've bought the policy, the premiums on most policies
do not automatically increase because you get older. If you
buy at age 65, you'll always pay the same price as new customers
who are 65 years old.
However, it is likely the company
will raise the rates for all customers as costs increase.
Other factors include: daily benefit, elimination or
deductible period and benefit period. These are
described below.
How Much Will The Policy Pay?
Most policies define benefits in terms
of the maximum daily
benefit and offer
numerous choices, for
example $50, $90, or $120 per day. You'll pay a higher rate
for higher benefits.
A policy that pays $90 per day could pay the actual bill (up
to the $90 limit), or pay a
flat per diem of $90 - read the policy to know exactly how
the daily benefit is paid.
Other policies pay a single
sum per month to cover all expenses.
If I Have
Long-Term Care Insurance, Will I Be Required To Pay For
Any Of My Long-Term Care
Expenses?
Depending on the policy you choose, you will likely be
responsible for a set number of
days you spend in a nursing home
before your insurance payments start. This is called
an
elimination period
or deductible period.
For example, a 90-day elimination or
deductible period means you will pay for the first 90 days
out of your own pocket.
When selecting a
policy, you will have certain options as to the length of
the elimination or
deductible period. The premium for a company's policy with a
90-day
elimination period is more affordable than the same policy
with a shorter period.
Of course, that 90-day elimination period means you'll be
paying for the first 90 days
of care yourself. If
you leave the nursing home within 90 days, such a policy
will cover no part of your expenses.
How Long Will The Policy Pay?
The benefit period
tells you how long the policy will pay
daily benefits.
·The benefit period can be as short as one year or
as long as 'lifetime' (unlimited).
·
Increasing a policy's benefit period will also increase its
price.
What Is
Inflation Protection?
You buy LTC
insurance for the future, not the present, and long-term
care costs could be a lot higher
in the future. Will the policy you buy today be enough to
cover the cost of care 10 years from now?
To help with such problems, companies offer optional
inflation protection.
·
The most common inflation protection automatically increases
benefits each year by 5%
(compounded interest).
·
Many companies build the cost of inflation protection into
your policy premium so your payments
are the same every year.
·
Inflation protection could increase your premium by as much
as 100%.
What Happens If I Stop Paying My Premiums?
Long-term care
insurance is term insurance. That means you have the
protection only as long as you continue paying the premiums.
It is not an investment or savings
account of any kind.
Therefore, no matter how many years you have had the policy
or how much you have paid into it, the policy disappears
when your payments stop.
What Is A
Waiver Of Premium Option?
This benefit is available in many LTC policies. It allows
you to stop paying premiums once you start
using the policy.
