Short-Term Long-term Care Insurance
Short-term long-term care insurance might seem like an oxymoron. How can an insurance product designed to help you pay for long-term care costs look like short-term care insurance? Here are three characteristics of short-term long-term care insurance:
- Shorter benefit periods.
- Smaller initial pools of money.
- Shorter elimination periods.
However, this is where the similarities end! There are differences that are important to understand, along with knowing about the best selling short-term long-term care insurance product on the market.
Short-Term vs Long-Term
True short-term care insurance is “non-tax qualified,” while long-term care insurance is “tax-qualified.” The main difference here for average consumers is the certification period of needing care once the benefits are being used or once a claim is filed. Tax-qualified or non-tax qualified not only means how the premiums are treated on the tax return, but tax-qualified long-term care insurance policies have a 90-day certification of needing care. In contrast, a short-term care policy has a 0-day certification of needing care.
So, even though the benefit triggers are the same for each type of policy (needing assistance with 2 of the 6 ADLs), a short-term care insurance policy will start to pay benefits sooner than a long-term care policy once the elimination period is met, of course. Since short-term care insurance has a zero-day certification period, using the insurance is great for short-term care needs.
Example of Short-Term Insurance Policies
A broken leg, for example, typically requires 6 weeks with a full leg cast, which would create a challenge for bathing, dressing, and transferring. Without a short-term care insurance policy, you would either struggle very hard to do those tasks yourself, pay out-of-pocket for a home healthcare aide to assist you, or pay out-of-pocket to stay in a rehab facility for the duration of the leg cast. With a short-term care insurance policy, you’d qualify to receive benefits even though you are expected not to need assistance once the leg cast is removed, usually within six weeks.
Once the elimination period of the short-term care policy is satisfied (usually 0, 15, or 30 days), the policy will reimburse you for the cost of your care for that broken leg. Keep in mind that your health insurance policy will not cover the full cost of six weeks in a rehab facility and would likely not pay anything towards a home health aide.
A long-term care insurance policy would likely not pay any benefits towards the cost of care for that same broken leg because the anticipated care will last less than 90 days.
Application Approvals – The Process
Another important difference between short-term care insurance and long-term care insurance is the application process and the ease of getting the application approved.
Short-term care insurance applications are usually considered “easy-issue” or “simplified-issue” because there are fewer health questions and no medical underwriting except for a prescription drug report. Approvals are usually received within a week of the application date, and the policy is issued shortly after that.
Conversely, long-term care insurance typically has more health questions on the application, requires a third-party health interview (with or without a cognitive test), and requires medical records from primary care doctors and specialists. The medical underwriting for long-term care insurance can take 3-8 weeks for the underwriters to receive and review all pertinent health information before approving the application.
Therefore, it is typically easier to qualify for a short-term care policy than a long-term care policy.
How would it look if you combined the best of both types of insurance policies? It would look a lot like short-term long-term care insurance.
Short-Term Long-Term Care Insurance Policy – Best Seller
Now that you understand the similarities and differences between short-term and long-term care insurance, let’s explore a new product that has been on the market for about a year. This short-term long-term care insurance policy is the top-selling long-term care insurance policy in the country. And, it really is the only short-term long-term care policy on the market today.
The best part of this short-term long-term care insurance product is the easy underwriting. It is the only traditional, stand-alone long-term care insurance policy on the market that has no medical underwriting. Only an application is required, and the home office runs a prescription drug report. Application approvals are usually done within 24-48 hours, and the policy is issued the very next day.
How Can An Insurance Company Do This?
By limiting the benefit period to 1 or 2 years and by capping the starting daily rate to $300 ($9,300 per month), the company is limiting its risk. Other traditional stand-alone policies can have benefit periods of 3, 4, 5, 6, 7, or even 8 years, with daily benefits starting from $330 up to $500 ($9,900 up to $15,000 per month). The policies with the greater risk to the insurance company will have more stringent medical underwriting.
If you add the 3% or 5% compound inflation rider to the short-term long-term care insurance policy, it makes the policy Partnership-qualified in most states. Therefore, this company offers the only traditional, stand-alone short-term long-term care insurance policy with simple underwriting. The simple underwriting of this policy will make it available to more people than any other product on the market today. That is why it is the number one selling long-term care insurance product today.
This short-term long-term care insurance policy is good for people with the following health conditions:
- Neuropathy (without diabetes)
- Heart disease (except congestive heart failure)
- Autoimmune disorders (except Lupus, MS, Addison’s, Myasthenia Gravis, CRMO)
- Chronic depression (except bi-polar disorder)
- Kidney disease (without diabetes)
- History of Stroke (over 3 years recovered)
- History of Cancer (over 3 years recovered)
The company selling this policy has an A+ financial rating from AM Best and has been in business for almost 150 years. This company has been selling some form of long-term care insurance for over 35 years. The only criterion is working with a licensed agent who has the proper state licensing and training and holds an exclusive contract with this company.
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