Long-Term Insurance Care : Consumer Guide

When shopping for long-term care, make sure you take your time and compare the features of several policies each insurance offered.

The company's reputation and legitimacy

Make sure the insurance company under consideration is licensed in your country and that they bring good financial ratings from well-known ratings agencies such as AM Best Company, Duff amp; Phelps, Inc., Standard & Poor's Insurance Rating Services and Moody's Investor Services, Inc.

Coverage Parameters

Policies will differ in the types of services they support. Some include home care, others cover custodial or personal care in various settings such as assisted living, adult day care, and home health care. Some include a combination of services. Be sure to choose the policy that best suits your specific needs.

Benefits Payout

How much does the policy pay per day for care in certain settings (eg. nursing homes, assisted living)? How does the policy pay for the services (for example, a fixed daily amount, as reimbursement for medical expenses up to a daily maximum)? Does the policy have a maximum lifetime limit? If so, what is it for nursing home care? Home health care?

Waiting Period

How long the insured must wait before he can start receiving benefits? Most policies range from zero to 180 days. Usually the longer the period, the lower the cost of the policy.

Eligibility, Feasibility

Does the policy use of particular benefit triggers to determine when you will be eligible to receive benefits? Such triggers could include activities of daily living that the insured needs help with, such as bathing, eating, and dressing; cognitive, such as Alzheimer's disease or a stay in hospital is a prerequisite for nursing home benefits.

Benefits Protection

This policy must include inflation adjustment feature to ensure that the benefits remain in line with the increasing cost of care. Determining the rate of increase is, how often it is applied, and for how long. Additional protections include a "guaranteed renewable" clause, which states that the policy can not be undone when you get older or if you suffer from physical or mental damage, and non forfeiture benefit, which guarantees that a portion of your profits are still available to you if you cancel the policy or unintentionally let it lapse.

Tax implications

Most long-term care policies sold today is the federal tax qualified, which means the premium paid, and out-of-pocket costs for long-term care, can be applied to the 7.5% reduction in medical costs contained in the federal tax code. In addition, long-term care benefits received are not taxed as income up to certain limits. Consult with a tax advisory to learn more about the tax implications of long-term care insurance.

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