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Designing your Long Term Care Insurance Policy

Core Benefits of a Long Term Care Insurance Policy

Long term care insurance has 4 primary "moving parts."  These 4 benefits will determine the amount of coverage within your policy.

Coverage is completely flexible.  You get to choose the amount of your benefits.

Whether you are reviewing traditional long term care insurance policies or asset-based policies, your choice of building blocks are the same.

The "Key 4" building blocks of a long term care insurance policy:

1.  Daily or Monthly Benefit:  The amount of money you wish to receive for your daily or monthly cost of care

2.  Benefit Period----How many years you wish your policy to provide benefits to you

3.  Waiting Period----The number of days you can afford to wait prior to receiving benefits once you need care

4.  Inflation Protection----How you wish to increase your benefits on an annual basis to keep up with inflation

Of course insurance companies offer many optional riders, as well.  "Bells and Whistles," so to speak. 

The above 4 building blocks, however, are what is most important in your policy. You should focus your attention on these benefits if you wish to make the best choices for yourself.

Long Term Care Insurance Pool of Money

Keep in mind that policies do not limit you by "time."  If you buy a 5 year policy, your coverage does not end after you need care for 5 years.  There is no Time Limit on your policy.  Your policy has a Dollar Limit.

How is my total coverage calculated in my insurance policy?

Your policy’s benefit amount or “Pool of Money” is calculated by multiplying your daily benefit by the number of days in your benefit period.

For example: $200.00 daily benefit x 3 year benefit period x 365 days = $219,000 pool of money.  (200 x 3 x 365)

A policy with a monthly benefit calculates the pool of money in the same fashion.

For example, $6000 monthly benefit x 3 year benefit period x 12 months = $216,000. (6000 x 3 x 12)

Again, there is no time limit on your policy.  With the Pool of Money concept, if you are drawing out of your policy $3000 month for your care, the above policy example of a $6000 month benefit and a 3 year benefit period will actually provide you benefits for 6 years.

With the Pool of Money concept, as long as you have dollars remaining in your policy, you have coverage.

Considerations for your Long Term Care Insurance Benefit Choices

There are a few things you might wish to consider when making your choices of benefits.

•Current cost of long term care where you live, or where you plan to retire.

The average daily cost of care nationwide is $206.00, however the cost of care will vary depending upon where you live.

See the Current Cost of Long Term Care Study for your State, City or Area

•The length of time you wish to be covered should you need care.

The average long term care need is about 3 years, and 90 percent of all claims are less than 5 years. Women, however, tend to need to receive care longer than men.

Your needs and your personal experiences may be different than the average, however. You may, for example, wish to account for a family history of Alzheimer’s or Parkinson’s disease.  Unlimited Lifetime benefit periods are still available through this terrific hybrid long term care policy.

•Your income and investment resources.

You may be able to handle a portion of the cost of your care, or you may wish to have full coverage.

•Your current age, and your genes.

You may have longevity in your genes and you may not expect to need your policy for years. Is it important for your insurance benefits to keep up with inflation?

LTC Partner Can Help

We know the choices within long term care insurance policies can seem a bit overwhelming.  Whether you are looking for traditional policies, a hybrid long term care life insurance policy, or a long term care rider we will help simplify your choices for you.  We will answer your questions, and help guide you through your policy options.  Please feel free to call us at 800-891-5824 with any of your questions or if we can assist you with getting approved for coverage. 

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