Policy features
Following is a list of some of the common features of a good LTCI policy. Some of these provisions may be written into the standard policy, while others are available only as options and riders. In any case, make sure all the provisions you want are included in your policy before you buy.
Types of care covered
A good LTCI policy should provide coverage for skilled care, intermediate care, and custodial care.
Location of care
The choice of where care is received should be left to you, not the insurance company. The following options should be available to you:
Triggering conditions
A good policy does not require long-term care to be ordered by a doctor before it will pay benefits. This type of "trigger" is extremely restrictive, and could prevent you from receiving benefits in many instances. Instead, look for a policy where benefits are triggered if you need assistance to perform a certain number of activities of daily living (ADLs)--bathing, dressing, toileting, transferring (from bed to chair), eating, and continence--or if you become mentally impaired.
Guaranteed renewable
Almost all LTCI policies sold today are guaranteed renewable. This means that they cannot be canceled as long as you pay your premiums on time, and as long as you were truthful about your health on the application for insurance. It also means you will be able to renew your coverage annually without providing proof of insurability.
Level premiums
While this provision doesn't guarantee you'll pay the same premiums for as long as you own the policy, it does provide a certain level of protection against premium rate hikes. If you purchase a policy with level premiums, the insurance company cannot raise your personal premium rate. However, they can raise the rates for an entire class of policyholders (with approval from the state regulator).For example, if you purchase a long-term care insurance policy when you're 55, you'll always pay the same rate as a 55-year-old buying a new policy.
Inflation protection
Make sure your policy contains an inflation protection rider to offset the rising cost of long-term care. With an inflation rider, your benefit amount will increase each year the policy is in effect (although the rate of the increase varies from policy to policy). The amount of the annual increase may be a percentage of the original benefit amount (a "simple inflation rider") or a percentage of the previous year's benefit amount (a "compound inflation rider"). Without an inflation rider, the benefits provided by your policy could be completely inadequate by the time you actually need them.
Waiver of premium provision
This provision allows you to stop paying premiums while you are receiving benefits.
"Free look" provision
You should have the right to return the policy for any reason within 30 days after you purchase it, and to receive a refund of any premiums you have already paid.
Respite care coverage
Respite facilities provide temporary care for an elderly or disabled person. They are designed to provide some time off for the primary caregiver (typically a relative). Respite care can be offered in a nursing home or other facility, or at home through the services of a home health aide.
Grace period for late payment
A good policy should provide a grace period during which the policy will remain in effect if your premium payment is late. Without such a grace period, a late payment could cause your policy to be canceled immediately.
Third-party notification
This provision allows you to name a third party (such as a friend, relative, or your attorney) who would be notified by the insurance company if your policy is about to lapse due to nonpayment of premiums. This third party would then have a certain period of time to pay the overdue premium and prevent the policy from lapsing. This provision is especially useful for individuals concerned about cognitive impairments (e.g., Alzheimer's disease, etc.).
What the experts say
The National Association of Insurance Commissioners (NAIC) has developed certain standards to aid consumers in selecting appropriate insurance coverage. For long-term care insurance, the NAIC recommends looking for for a policy that includes the following:
Please Note: The information contained in this Web site is provided solely as a source of general information and resource. It is a not a statement of contract and coverage may not apply in all areas or circumstances. For a complete description of coverages, always read the insurance policy, including all endorsements.