Protecting Assets While Maintaining Independence
Long-term Care insurance policies reimburse policyholders a daily amount (up to a pre-selected limit) for services to assist them with activities of daily living such as bathing, dressing, or eating. You can select a range of care options and benefits that allow you to get the services you need, where you need them. If you are in poor health or already receiving long-term care services, you may not qualify for long-term care insurance as most individual policies require medical underwriting. In some cases, you may be able to buy a limited amount of coverage, or coverage at a higher “non-standard” rate. The cost of a long-term care policy is based on age, daily payout, number of days covered and any optional benefits, such as inflation protection.
With a traditional policy, you elect your benefits at the outset: monthly benefit, benefit period, inflation protection and waiting period. You are able to design the policy to account not only for your current needs but also to account for future inflation. Premiums are typically paid on a monthly, quarterly, semi-annual or annual basis. This “pay-as-you-go” approach keeps the premium affordable and attainable. As long as you pay your premium, you will have coverage in-force. Your premium may be subject to a rate increase so it is important to understand the financial rating and rate history of the company you select for your traditional long term care policy.
A hybrid long-term care policy combines the benefits of life insurance with long term care insurance. If it turns out long-term care is not needed, the policy works much like a traditional life insurance policy, with a death benefit paid to a beneficiary. Hybrid policies will pay for your costs should you need care and provide your estate a tax-free life insurance benefit should you not need care. Hybrid policies are often funded with a one-time single premium or installment payments over a set number of years. Hybrid policies may be worthwhile for you to consider if you have liquid assets generally not needed for retirement income that can be easily re-positioned.