Exploring the Lesser Known Features of Long-Term Care Insurance
Buyers of long-term care insurance often focus on just the coverage basics, such as the level of daily benefits, length of coverage, and under what conditions the policy will pay a claim. While these basics form the chassis of the policy, long-term care policies offer a host of other options that may prove beneficial to the policyholder.
Let’s take a look at some of these available options:
Survivorship Premium Waiver– If both spouses obtain long-term care policies from one insurer, some policies will provide a waiver of all remaining premiums if one spouse dies within a certain number of years after the policy is issued. For example, the policy may provide a premium waiver if the policies have been in effect for 10 years before one spouse passes away. The policy might also stipulate that no claims could have been paid during the period.
This feature may be included with the policy automatically or it may be offered as a rider to the base policy for an extra premium.
Shared Pool of Benefits- Instead of each spouse having an individual policy with separate benefits, they can elect to share each other’s benefits if needed. For example, each spouse might have a policy with a 3-year benefit period. Once one spouse has expired 3 years of benefits they have no further coverage, but the other spouse may still have 3 years of coverage remaining. With the shared pool of benefits rider, the spouse receiving care could also access the other spouse’s benefits.
This feature is most commonly offered as rider to the base policy for an extra premium.
Alternate Plan of Care– With our population continuing to age, new ways of delivering long-term care will continue to be developed. Not too long ago, no one had ever heard of adult day care or assisted living facilities.
With the alternate plan of care feature, you can ensure that your policy will never grow obsolete. You, your physician, and the insurance company will develop a plan of care which best serves your needs based on currently available options.
Look for this feature to be included in the policy with no additional cost.
Accelerated Premium Payment Options– Many insureds worry about their ability to afford premium payments during retirement when their income is reduced. Some insurers offer policyholders an option to pay accelerated premiums for a shorter period of time with the benefit of a contractually paid up policy after a certain period. For example, a 10- or 20-year accelerated payment period with no further premiums due afterwards.
This option has several benefits. Business owners may be able to deduct premiums from their taxes during their working years with no further premiums due in retirement. Additionally, with the cost of long-term care increasing rapidly, a contractually paid up policy means no exposure to premium adjustments made by insurers in future years to account for higher than expected claims experience.
Enhanced Elimination Periods– While all policies provide several elimination period options ranging from a 0 day to a 180 day elimination, it’s important to understand how the elimination period can be satisfied.
For example, some policies may credit a week towards your elimination period with just one day of home care received per week. Still another policy may have no elimination period for home care benefits while nursing home or assisted living facility care may require an elimination period.
These are just a few of the lesser-known features of long-term care insurance. There are many other options to consider when selecting a policy, but be sure to compare not only the basics of each policy but the included features and available riders.