Most people understand life insurance. You buy a set amount; say $250,000, and when you die that money is paid to whomever you chose – the beneficiary.  Long term care is similar in that you choose the total amount, say $100,000, and it pays when you need help with everyday activities.  Instead of paying $100,000 at once, it pays over time up to the benefit you choose.

Long term care insurance has 2 critical components: Benefit and Benefit Pool.

  • Benefit: The maximum amount of money paid to cover the cost of care.  If the cost of care is less than your benefit then that money stays in your benefit pool to be used in the future.  If the cost is more than your benefit, you or your family will need to cover the difference.
  • Benefit Pool: The maximum amount of money your policy will pay out. Your benefits will continue as long there is money left in the benefit pool.