subject: Comparing Long Term Care Insurance Policies [print this page] Comparing Long Term Care Insurance Policies
We've heard it many times and agree that long term care insurance is important but, admittedly, we find it difficult to decide and plan on this. Most companies will offer list of confusing and technically written descriptions of benefit options and riders that we, consumers, become confused and irate as to which appropriate coverage should we get.
Many of us want to save time and avoid headache when comparing long term care insurance policy options. The following should be assessed to determine the coverage you need:
Your health condition
Your family health history
Your age
Your current income and assets you wish to protect
You family situation
Evaluating Important Features of the Policy
Premium. The premium must be affordable enough to considerably pursue the lifestyle you have had and protect the assets you have reserved for your children and family. The general rule of thumb is the premium should not exceed 7 percent of income and 5 percent of total assets.
Maximum daily or monthly benefit The benefits pay out either on a daily or monthly basis. Always canvass the costs of facilities in your area to get idea how much you will need. Insurance agents also suggest covering at least half of the benefits and paying the remaining to keep the premiums manageable.
Elimination or Waiting period This deductible is stipulated in the policy as the number of days the policyholder will shoulder their own care. The days range from 30, 60, 90, 180, and 360. Be careful in choosing the elimination period because this can cost you a lot.
Inflation protection This is the most important rider. Although this can raise the premiums, it pays off because it automatically increases the benefits but keeps the premiums fixed. The inflation can be simple or compound. The latter is the most expensive and recommended for younger policyholders.
The Policy Type
Reimbursement Most policies are designed as reimbursement only. This requires you to submit receipts for the company to reimburse the amount incurred. However, this type does not provide flexibility on how you want to take control over your benefits.
Indemnity Tthe other type is the indemnity policy. This provides greater flexibility on your benefits by providing fixed daily benefits regardless of the actual expenses incurred. For instance, you have an indemnity policy that pays $300 daily benefit but your bill is only $250, you will get the full $300 and keep the remaining balance.
Choosing a Company
As much as you evaluate the policy, you should never forget the company. It's never that easy to change company when you think your current company is not doing its job. Unfortunately, there are lots of insurance companies, but few of them have spotless record in the long term care business.
Always check how long the company has been providing LTC insurance. Companies operating for more than 10 years have gained enough experience in claims and increased their market share. You may check the financial ratings through A.M Best, Standard and Poor's, and Moody's.
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