Long-Term Care Insurance: FAQ Text Size:

• How does my health history affect the cost of the insurance?
• How long a period should I insure myself for?
• What is the best way to calculate how much coverage I should buy?
• What's a "benefit trigger" and why is it important?
• What's the difference between a group certificate and an individual policy?

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Q: How does my health history affect the cost of the insurance?

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• A:

  Your health history not only affects the cost of long term care insurance, it also may determine your eligibility for coverage. A person with chronic health problems poses a greater risk of needing long term care services sooner rather than later and, therefore, will likely pay a higher premium for coverage than does a person who is in good health. Also, if you have a pre-existing condition such as heart disease or diabetes, long term care insurance may not be available, but if you find a policy that does cover pre-existing conditions, your premiums may be higher than for a person without any pre-existing condition.

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Q: How long a period should I insure myself for?

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• A: That depends upon your age and health. If you purchase long term care insurance at a young age, you would be paying very low premiums but for a long period of time before you can reap any benefits. Usually, the best time to buy is between the ages of 50 and 55, particularly if your employer is offering a low-cost group long term health insurance. You can purchase long term health insurance at an older age but the premiums may be beyond your available income. Also, older persons with a pre-existing condition such as heart disease may not qualify for coverage.

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Q: What is the best way to calculate how much coverage I should buy?

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• A: You should buy enough coverage where the amount of benefits provided and the amount of your income will equal the cost of long term care that you need. However, there are a number of factors that will go into determining the amount of coverage you should have:
  • The cost of care in your area
  • The amount of services you want or need included in your coverage
  • The amount of coverage or services you can afford in terms of premium payments

  Although not a factor in determining the amount of coverage you should have, you should seriously consider purchasing inflation protection to account for the rising cost of health care.

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Q: What's a "benefit trigger" and why is it important?

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• A: A benefit trigger is an event or events that must occur before you can receive benefits under your long term care insurance policy. Typically, you must require assistance to perform at least two activities of daily living (ADLs). An ADL consists of those basic human activities such as walking, eating, dressing, bathing and toileting. The benefit trigger is some policies includes cognitive impairment that prevents you from performing basic tasks.

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Q: What's the difference between a group certificate and an individual policy?

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• A: A group certificate is an insurance plan offered by an association for its members or an employer for its employees. An individual policy is one that you purchase directly from an insurer. A group policy is generally unregulated but has advantages of lower premiums and a greater range of long term care services because the risk is shared among the entire class of enrolled members. An individual policy is a guaranteed renewable policy that is regulated by the state insurance department with premiums determined by the amount and type of benefits that the individual can afford.