Long Term Care Insurance:The best Coverage for your Money

Here are some suggestions for the best coverage for your money when we talk about Long Term Care Insurance:

Elimination period/deductibles

• Avoid very low deductibles or elimination periods (EP), since lower deductibles have a much higher premium cost. Also, Medicare and a Medicare supplement policy may help defray the cost up to 100 days at the start of a long-term care (LTC) episode. That coverage often counts toward satisfying the elimination period.
• Recommend calendar-day EP over service-day EP.

Benefit length

• Avoid unlimited and very long benefit lengths. The best option is a 5-year policy.
• Concerning limited versus unlimited or lifetime coverage, based on buying at age 55, unlimited costs 40% more, on average, than 5 years of coverage.
• Over 90% of chronic LTC episodes will be fully covered by a policy offering 5 years of benefits.
• A 5year policy usually lasts longer than 5 years of use. The reason is that policies use the benefit pool or pot of money concept. The unused daily benefit is carried over for future use.
• If your client is very concerned about a 20-year Alzheimer�s episode, you can recommend longer coverage terms, shared care riders, higher daily benefits, or a state�s LTC Partnership program.

Other ways to prolong the life of the policy and/or reduce costs

• Shared care is often more cost effective than unlimited. But depending on the company, the additional cost can run from 10% to 22% for that rider. That is still less expensive than unlimited coverage.
• Use a higher daily benefit amount to expand the useful life of the policy
• Consider a state�s Partnership policy, especially in New York where unlimited asset protection is available.
• Avoid almost all other riders (i.e., survivorship, non-forfeiture, return of premium, etc.). They are expensive add-ons that may do nothing to enhance coverage.
• Encourage annual premium payment modes (especially at today�s interest rates).

The facts of a case will affect the analysis; I personally prefer a lifetime benefit length if there is a history of Alzheimer�s in the family, and particularly if the client is female. But it's good to recognize that benefits that are perfect for some may be less important to others.

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