Long term care insurance policies offer many benefits. But if you’re not familiar with LTC products or insurance in general, how do you know what to look for in a long term care insurance policy?
Never fear. The following will help pinpoint what you need to know when looking for the right long term care policy for you.
A Financially Strong Company
When choosing a long term care insurance policy, it’s important to look at the company providing it. Are they financially strong and stable? Will they be there to pay the benefit when you need it 20-30 years from now?
It’s wise to consider the financial strength of the insurance carrier, their history of rate increases, and experience with LTC insurance claims. Work with an LTC Specialist who is experienced in the market and can guide you to strong and stable carriers.
Access to a Range of Care
Do you prefer to receive care in your home? Or perhaps a community-based care model or an assisted living facility?
Most policies today cover care in these locations and more. But it’s important to understand, care services may change in the future.
Find a policy that covers today’s care facilities and is flexible to cover care in the future, however that may look.
Coverage that Protects Your Risk
Long term care policies are flexible so you can decide how much benefit you want and how long you want it to last. The two main factors that determine your benefit pool, or pool of money, is the daily or monthly benefit and the benefit duration.
- Daily or Monthly Benefit – Depending on the carrier or product, you may choose a daily or monthly benefit. A daily benefit pays up to the daily allowance. For example, $150 per day. A monthly benefit pays up to the monthly allowance. For example, $3,000 per month. Monthly benefits offer more flexibility when care needs may fluctuate day to day.
- Benefit Duration – The benefit duration is the number of years your coverage will last. The most common benefit durations are three or four years of coverage.
When you multiply these two factors together, you get your pool of money. For example, a $3,000/month benefit for four years equals a benefits pool of $144,000.
Inflation Protection for the Future
In the example above, $144,000 may sound like a lot today, but it won’t be worth as much in 20-30 years when you need care. This is why it’s important to grow your coverage over time with inflation protection.
Compounding inflation will grow your pool of money at 3-5% each year. Additional inflation options are available to fit your budget.
Who doesn’t love saving money? You may be eligible for discounts for having great health, being married or in a domestic partnership (according to carrier standards), or applying for coverage with your spouse or partner. Explore all your options to secure the discounts you deserve.
LTC Consumer is an independent, free online service to help consumers understand what long term care insurance is, how it works, and how to evaluate coverage options. Our mission is to provide an educational, no-pressure resource for learning about long term care planning, with the opportunity to speak with specialists who can help them.