What is the “Policy Limit” or “Benefit Period” in a long-term care insurance policy?
When buying your long-term care insurance policy, you choose a “Benefit Period”, which is a limit on how much the policy can pay in benefits over your lifetime. It is sometimes referred to as the "Policy Limit" or the policy's "Maximum Lifetime Benefit". As with any...
How is a long-term care insurance policy’s “Policy Limit” calculated?
The "Policy Limit" is the most that your long-term care policy can pay in benefits over your lifetime. It is also referred to as the "Maximum Lifetime Benefit". The "Policy Limit" is usually calculated by multiplying the Daily Benefit by 365 and then multiplying...
Does a long-term care policy’s “Policy Limit” grow?
With most long-term care insurance policies, as your Daily Benefit increases according to the Inflation Benefit, the "Policy Limit" also increases. For example, if you were to choose the 5% Simple Inflation Benefit, and a Starting Daily Benefit of $200, your Daily...
Will my long-term care policy stop paying benefits at the end of my “Benefit Period”?
Long-term care insurance policies will continue to pay benefits for as long as you are receiving qualified care and as long as you have not yet reached the Policy Limit. In other words, if you do not use all your Daily Benefit each day, what is not used is still...
Can I buy another long-term care policy if I reach my “Policy Limit”?
A question I am often asked is: "If I buy a long-term care insurance policy with a 3-year Benefit Period, what happens if I go on claim and use up all of the policy's benefits, but I continue to need care? Can I buy another policy after the first policy runs out of...
Does a “Lifetime” Benefit Period really mean the long-term care policy is “Unlimited”?
For example, if you chose a Lifetime/Unlimited Benefit Period, if you were to get Alzheimer’s and need care for 20 years (or even longer), the policy would continue to pay the benefits, no matter how long you received qualified care. Over the past 15 years, about...
What is the “Inflation Benefit” in a long-term care insurance policy?
The Inflation Benefit is how a long-term care insurance policy's benefits grow in order to try to keep pace with the increasing costs of care. The Inflation Benefit is sometimes called "Inflation Protection" or "Benefit Increases" or "Benefit Increase Option"....
What are some common choices you have for a “Type 2” Inflation Benefit
Most long-term care insurance policies offer several choices for the Inflation Benefit. The most common "Type 2" Inflation Benefit choices are: 3% Compound: the Daily Benefit you choose for your long-term care policy will automatically grow each year by 3% over each...
Watch out for this “gotcha”: Inflation Benefits that stop growing!
Be aware that some long-term care insurance policies offer Inflation Benefit options that stop growing at a certain point. Another way to say this would be that the Daily Benefit (or Monthly Benefit) has a "cap" on it. For example, an Inflation Benefit might be...
How does your choice of Inflation Benefit impact the Daily Benefit over the life of your long-term care policy?
How does the Inflation Benefit impact the Daily Benefit of your long-term care insurance policy? I noted in a previous post that the Daily Benefit is the single most important part of your long-term care policy. The Daily Benefit, however, is linked to the Inflation...
Little known secret about the Inflation Benefit in a long-term care policy
Depending upon your age, when buying your long-term care insurance policy, you may be better off buying a higher Daily Benefit with a 3% Compound Inflation Benefit rather than a lower Daily Benefit with a 5% Compound Inflation Benefit. In some situations, it might be...
What is the “Daily Benefit” (a.k.a. “Monthly Benefit”) in a long-term care policy
The Daily Benefit is the amount of money your long-term care insurance policy can pay for each day that you receive qualified care. The Daily Benefit is the single-most important feature in your long-term care policy. Choose it wisely! The Daily Benefit is sometimes...
2 “gotchas” you need to watch out for when choosing your “Daily Benefit”
Gotcha #1: Some long-term care insurance policies have different ways of determining the Daily Benefit depending upon the setting in which you are receiving care. For example the: Nursing Home Daily Benefit may be $200, Assisted Living Facility Daily Benefit may be...
How does your choice of Daily Benefit affect the cost of your long-term care policy?
When all other features in your long-term care insurance policy are the same, a policy with a $240 Daily Benefit is 20% more premium than the exact same policy with a $200 Daily Benefit. ($200 + 20% = $240) But, when making those comparisons, it's important that all...
Protecting Your Assets With A Government-Approved, Long Term Care Partnership Policy
In the old days, in order for the government to pay for someone's long-term care expenses, they would have to spend down their "countable assets" to the "poverty level" (about $3,000). In conjunction with the federal government, 43 states have passed landmark...
10 ways to reduce your taxes with long-term care insurance
There are now 10 tax-friendly ways to pay long-term care insurance premiums. Depending on your situation, you could save hundreds (possibly thousands) of dollars in income taxes over several years by applying just one of these methods. Caveat: I'm not a tax advisor....
Be careful of “assocation discounts” when buying long-term care insurance
A few months ago, a couple went to my website and filled out my "Online Quote Request Form". Several years ago, they had purchased a "discounted association policy" through the wife's professional association and now they wanted to compare rates. The insurer that was...
The biggest mistake made when shopping for long-term care insurance: confusing the two types of Inflation Benefit
Year Growth in Daily Benefit Growth in Policy Limit Type 1: Company Q (rated A++) Premium: Type 2: Company Z (rated A++) Premium: 1 $170 $372,300 $2,087 $1,655 5 $207 $453,002 $2,087 $2,011 10 $264 $578,160 $2,087 $2,567 15 $337 $738,030 $2,087 $3,276 20 $431 $945,094...
How much and when can long-term care insurance premiums be increased?
How much (and when) can long-term care insurance premiums be increased? It depends upon the type of the policy you buy. There are two types of long-term care policies that can never have a rate increase: Single-pay long-term care policies and Limited pay long-term...
Understanding “cash policies” and “reimbursement policies”
There are two main types of long-term care insurance policies: "Cash Policies" and "Reimbursement Policies" A "Cash" long-term care insurance policy is a policy that pays the full Monthly Benefit for each month that you qualify for benefits, regardless how much your...
The Most Common Mistake: Group long-term care insurance often costs more and offers less
Conventional wisdom says that group insurance policies cost less than a policy you purchase on your own. That may be true for certain types of insurance, but it is not always true for long-term care insurance. You can probably get better benefits for less premium if...
Long-term care insurance is “not so” complicated?
Long-term care insurance helps pay for assistance you need with "personal care". "Personal care" may include help with bathing, dressing, eating, and toileting. Personal care is not covered by medical insurance. Personal care is not covered by Medicare nor Medicare...