Designing Your Policy

Designing Your Policy

What do I look for in my policy? The following is intended as a starting point for basic considerations when looking at a policy illustration. For more information about policy design options and specifics, please email us at to speak with a LTCi Advisor today.

Qualified Policies: So long as the LTC policy meets certain criteria established by the federal government, the premiums for the policy are considered “medical care” and thus qualify for the medical expense itemized deduction.

Company Ratings: We believe that your LTC insurance policy is only as strong as the company behind it. You want to make sure that, if the time comes to make a claim, your company will be there to support you. Companies should be financially sound and have a reputation or treating policyholders fairly. We can help you in choosing the right company for you.

Benefit Amount: A policy will generally specify a maximum daily or monthly dollar benefit payable to the insured. A quick survey of the costs of long-term care in your state or area may help determine the amount needed. Most LTC insurance carriers allow you to tailor your benefit amounts in $10 increments for daily and $100 increments for monthly.

Benefit Period: The benefit period is the length of time your long-term care insurance will pay benefits. Most companies/plans will pay out benefits for between 1 and 6 years, one company even offers a lifetime benefit. The longer the benefit period, the higher the premium cost. Bearing in mind that the average nursing home stay is just under three years*, we typically will recommend a benefit period of at least three years.

*”The average length of time since admission for all current nursing home residents was 835 days, or approx. 2 years 4 months.”
The National Nursing Home Survey

Total Coverage/Pool of Money: This is simply the Benefit Amount multiplied by the Benefit Period. If you have an Inflation Protection rider, your total coverage/pool of money will grow each year. It is important to note that if your maximum daily/monthly benefit is not used in any month to reimburse you for LTC expenses, the excess amount stays in your “pool of money.” In effect, your Benefit Period would be extended.

Inflation Protection: The costs of long term care services in all settings will inevitably increase. For an additional premium, your policy will protect against this increase.

Below is an example of how your LTC insurance benefits can increase over time with various inflation protection options.InflationProtectionGraph 2

Elimination Period: The elimination period is the period of time for which you need long-term care but you do not receive paid benefits. It is something akin to a car insurance deductible. During the elimination period, you must cover the entire cost of your long-term care out of your own pocket. When purchasing a long-term care insurance plan, you typically get to choose how long you want the elimination period to be. They are generally between zero and ninety days. The longer the elimination period, the lower the premium cost.

Shared Care Benefit: Many traditional LTCi policies now include a valuable benefit known as “shared care.” In general, as long as benefits between policies are identical and applying as a couple, this innovative benefit/rider allows an Insured who is on claim and has exhausted their benefits to continue receiving benefits by utilizing the Joint Insured’s policy benefits.

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