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Common Elements in Long-Term Care Insurance Policies•Amount of the benefit: Most policies pay a fixed dollar amount for each day you are eligible for the benefit; e.g., $80 per day. A survey of nursing homes in the local area can help determine the desired amount. •Inflation protection: Since costs inevitably increase, a policy without a provision for inflation may be outdated in a few years. Of course, an additional charge is incurred for this protection. •Guaranteed renewability: This important provision will prevent the insurance company from canceling your policy for as long as you continue to pay the premium when it is due. However, the insurer may be able to raise rates on a class basis. Currently, long-term care policies sold in most states are guaranteed renewable. •Waiver of premium: Some policies will waive the future premiums after you have been in the nursing home for a specified number of days; e.g., 90 days. •Prior hospitalization: This policy provision requires one to be hospitalized (for the same condition) prior to entering the nursing home, or no benefits will be paid under the policy. Although prior hospitalization clauses have been outlawed in all states, some older policies still in force may contain this provision. Policies currently sold do not contain prior hospitalization clauses. •Place of care: Does the policy require that the nursing home be licensed or otherwise certified by the state to provide skilled or intermediate nursing care? Must the facility meet certain record keeping requirements? •Plan of care: A plan of care is part of the health care claims process. It is the result of an assessment prepared by the insured’s physician, and a multi-disciplinary team, including practical nurses, social workers, and other health care professionals. The plan outlines the appropriate level of care needed to assist the insured in performing the activities of daily living. •Level of care: Three generally recognized levels of care, in an institutional setting:
•Pre-existing conditions: Depending on the state, a policy may limit coverage of pre-existing conditions to discourage persons who are already ill from purchasing the policy. Many policies will provide benefits if the pre-existing condition was overcome six months or more prior to applying for the policy. Also, some policies will not pay benefits if the pre-existing condition re-occurs within six months after the effective date of coverage. •Deductible or waiting period: Most LTC policies require you to "pay your own way" for a specified number of days (generally ranging between zero and 120 days) before the insurance company will begin to pay benefits. Of course, the shorter the waiting period, the higher the cost will be. This is usually referred to as an elimination period. •Alzheimer’s disease: Most policies now include coverage for organic brain disorders like Alzheimer’s disease. •Home health care (home care): Many long-term care policies can provide coverage in the insured’s home. It is most often offered as a rider (requiring an additional premium) to nursing facility coverage, and reimburses the cost of long-term care received at home. •Rating the company: Companies should be financially sound and have a reputation of treating policyholders fairly. |
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Securities offered through Sigma Financial Corporation. A registered broker/dealer. Member FINRA & SIPC.Planning Services offered through Sigma Planning Corporation, a registered investment advisor.Any information contained on this site does not constitute financial advice. The Website is intended to provide general information only and does not attempt to give you advice that relates to your specific circumstances. You are advised to discuss your specific requirements with an independent financial adviser licensed in your state. We do not offer legal advice. All information provided on this website is for informational purposes only and is not a substitute for proper legal advice. If you have legal questions, we recommend that you seek the advice of legal professionals. IRS Circular 230 Disclaimer: To ensure compliance with IRS Circular 230, any U.S. federal tax advice provided in this communication is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer (i) for the purpose of avoiding tax penalties that may be imposed on the recipient or any other taxpayer under the Internal Revenue Code, or (ii) in promoting, marketing or recommending to another party a partnership or other entity, investment plan, arrangement or other transaction addressed herein. Asset allocation, diversification and rebalancing do not assure a profit or protect against loss in declining markets. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Past performance is no guarantee of future results. Investment products, insurance and annuity products:
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