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| Long-Term Care Insurance: FAQ |
What is the best way to calculate how much coverage I should buy?
How long a period should I insure myself for?
What's the difference between a group certificate and an individual policy ?
What's a "benefit trigger " and why is it important?
How does my health history affect the cost of the insurance?
Q: What is the best way to calculate how much coverage I should buy?
A: It's difficult to give an ironclad answer because each individual has a different comfort level with risk tolerance and how much of their income and assets they're willing to spend to avoid risk. The amount of coverage depends in part on what you need and in part on what you can afford. As a general guide, you should not spend more than five to 10 percent of your income (both earned and unearned) on long-term care insurance premiums. In terms of the size of the daily benefit you purchase, it should make up in the shortfall between your income and the average cost of nursing home care in your area.
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Q: How long a period should I insure myself for?
A: There is no one right answer for everyone. Most people buy what gives them peace of mind and is affordable. If you're between the ages of 50 to 65, consider lifetime benefits with compound inflation options. If you're 65 to 75, think about a six-year or lifetime benefit period with simple inflation options. Those older than 75 years old should consider buying more daily benefit for as long a period as they can afford.
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Q: What's the difference between a group certificate and an individual policy?
A: The difference between a group policy and an individual is significant even though the distinction may not be obvious. In some states, individual polices are regulated while group ones are not. Individual policies, however, are guaranteed renewable for life and premium increases for a class of insureds must be approved by the state.
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Q: What's a "benefit trigger" and why is it important?
A: A benefit "trigger" is the inability of the policyholder to perform specified Activities of Daily Living ("ADLs"), such as transferring, toileting, bathing, continence, dressing and eating. Ask your insurance agent for a copy of the actual policy in order to see for yourself how the benefit "triggers" and ADL performance are described. The policy you want must include coverage for ADL Standby Assistance. Otherwise, you will own a policy that is harder to qualify for benefits at claim time.
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Q: How does my health history affect the cost of the insurance?
A: Your personal health history can make a difference in both coverage and premium cost. Since insurance companies differ in the way they view certain health problems, it's essential that your insurance agent has access to a broad selection of insurance carriers.
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