Examining Long Term Care Insurance Benefits

---->Elimination Period <----


The elimination period works like the deductible on any other liability insurance. Instead of using dollars, long-term care insurance uses days. It is the number of days you are responsible for paying before your policy begins to pay benefits. You can choose 0,30,60,90 or 180 days, this varies from state to state, policy to policy. So, if you had a 60-day elimination period and the cost of care was $100 per day, you would have to pay $6000 out of pocket before the policy would begin to pay.

You need to select an elimination period that you are financially comfortable with, keeping in mind that the cost of care will most likely continue to rise with inflation.  To view how inflation impacts the elimination period, chose your age below and click continue.

Examining Long Term Care Insurance Benefits

---->Policy Maximums<----

 

Next we need to consider Policy Maximum. This is the maximum amount that your contract will pay over the entire term of your policy. The policy maximum can be thought of as a pool or bucket of money available for benefits. Your bucket is determined by multiplying your MDB x the period you select. You can typically choose from a 2,3,4,5 or Unlimited period. For example, if you used a 5-year factor with a $92 MDB your bucket of money would start with $167,900 worth of benefits.

5 Years x 365 days per year
= 1825 days
x $92 MDB
= $167,900 Bucket of Money

If you select a benefit increase rider, that amount will grow each year. The policy will pay benefits as long as there is money in your bucket. If you select an unlimited or lifetime option, then the policy will pay the MDB as long as you qualify for care.


Examining Long Term Care Insurance Benefits

---->Maximum Daily Benefit<----

Now we will discuss some of the issues surrounding Long Term Care Insurance polices.
This will help you in designing a LTCI plan that is appropriate for you.

The Maximum Daily Benefit (MDB) is the maximum amount your policy will pay for expenses incurred on any one given day. If you choose a fully integrated policy, it will be the maximum benefit paid on any given day for services received in a Nursing Home, Assisted Living Facility, Home Health Care, Adult Day Care, Hospice Facility or Respite Care.

Long Term Care Insurance can help you meet these costs in a couple of ways. First, you can buy a policy with a high enough MDB to cover most any situation that arises. Or you can co-insure the risk by having a policy that covers a majority of the cost and you make up the difference.

For example, if the cost in your area is currently $92.00 per day, you could buy a policy that pays $62.00 per day. The policy would cover up to $1,860.00 per month and you would co-insure the difference, which would cost you $30 per day or $900 per month. When you use the co-insure method, you can reduce your long-term care insurance premiums.

Proceed to the next page of planning

Click below to determine how time and the Rule of 72 can effect your planning

How does inflation affect Long Term Care



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