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The Lesser-Known Features of Long-Term Care Insurance

Buyers of long-term care insurance often focus on just the coverage basics, such as the level of daily benefits, the length of coverage, and the conditions under which the policy will pay a claim.


While these basics form the bulk of the policy, long-term care policies offer a host of other options that may prove beneficial to the policyholder. 


Let’s take a look at some of these available options:


Survivorship premium waiver – Some policies will provide a waiver of all remaining premiums if both spouses are paying for long-term care policies from the same insurer and one spouse dies within a certain number of years after the policy is issued.


For example, the policy may provide a premium waiver if one spouse passes away and the policies have already been in effect for 10 years. Some policies will only provide a waiver if no claims have been paid during the period.


This feature may be included with the policy automatically or it may be offered as a rider to the base policy for an extra premium.


Shared pool of benefits – Instead of each spouse holding an individual policy with separate benefits, they can elect to share each other’s benefits if needed.


For example, each spouse might have a policy with a three-year benefit period. Once one spouse has expended their three years of benefits they will have no further coverage, but the other spouse may still have three years of coverage remaining. With the shared pool of benefits rider, either spouse could access the other’s benefits.


This feature is most commonly offered as a rider to the base policy for an extra premium. 


Alternate plan of care – As long as our population continues to age, new ways of delivering long-term care will continue to be developed. Not too long ago, no one had ever heard of adult day care or assisted living facilities.


An alternate plan of care ensures that your policy will never grow obsolete. You, your physician, and the insurance company will develop a plan of care which best serves your needs based on currently available options.


Look for this feature to be included in the policy at no additional cost.


Accelerated premium payment options – Many people worry about their ability to afford premium payments after their income is reduced during retirement. Some insurers offer policyholders the option of paying accelerated premiums for a shorter period of time. This offers the benefit of a contractually paid-up policy after a shorter period of time. For example, a policyholder could opt for a ten or twenty year accelerated payment period with no further premiums due afterwards.


This option has several benefits. Business owners may be able to deduct premiums from their taxes during their working years with no further premiums due in retirement.


Additionally, a contractually paid-up policy means no exposure to premium adjustments made by insurers in future years to account for higher than expected claims experience.


Enhanced elimination periods – While all policies provide several elimination period options ranging from zero days to 180-days, it’s important to understand the specifics of how your policy’s elimination period works.


For example, some policies may credit a full week towards your elimination period even if you receive just one day of home care per week, while another policy may have no elimination period whatsoever for home care benefits. Nursing home or assisted living facility care may require an elimination period. 


These are just a few of the lesser-known features of long-term-care policies. There are many options to consider when selecting a policy—be sure to compare all the included features of each policy, not just the basic coverage.


Still have more questions? Call us and we can take you through it.