Cash Benefit = a feature in a long-term care insurance policy that allows the policy benefits to be used by the policyholder in any way he/she chooses. A “cash benefit” is often used to pay a family member to provide care. A “cash benefit” can even be used to pay a spouse to provide care. There are usually no (or very few) restrictions on how the policyholder can use the “cash benefit”.
A few policies allow for 100% of the benefits to be payable as a “cash benefit”. These are typically called “cash policies” or “cash indemnity policies”.
Most policies that have a “cash benefit” feature pay less than 100% of the benefits as a “cash benefit”, typically 33% to 50% of the benefits.
This is also called a “cash alternative benefit” or “alternative payment benefit”.