Basic Insurance Policy Features
A very essential consideration when it comes to insurance policies is their underlying features
, benefits and limitations. Your journey with long term care does not stop with knowing what policy to get. In fact, its just the beginning. And, knowing what features you policy possesses is very significant. Heres a list of the basic insurance policy features:Amount of Benefits
This is commonly expressed in daily or monthly amounts with a lifetime maximum limit.
Elimination Period
With this feature, options range from 0 to 365 days. No benefit will be paid after this period passes. If you recover during the waiting period, benefits are not paid. If your waiting period is 60 days, you will pay for 60 days long-term care out of pocket. Your policy will begin paying benefits thereafter. The longer your elimination period, the lower your premium will be. Make sure you are financially ready to meet your long-term costs of care in the waiting period.
Benefit Period
You need to choose how long you want your benefits to last. This period may range from 2 years to your lifetime. The longer the benefit period, the more expensive the insurance premium will be. Selecting a shorter time period can help reduce your insurance premium. The length of the benefit period is used in calculating the maximum lifetime benefit.
Indemnity, Reimbursement, or Going Rate
Most policies pay on a reimbursement basis, up to policy limits. Suppose your policy will pay a benefit up to $150 per day for long-term care in your home, but you only spend $130. You will be reimbursed for $130 only. The remaining $20 goes into a pool of money that will extend your benefit period. If your policy pays the going rate for a particular service, make sure you understand how it is calculated. The amount may be less than your actual expense. If your policy pays on an indemnity basis, you would be paid the $150 per day, no matter what you actually paid.
Inflation Protection
It is a very important feature, especially for those who buy insurance for long-term care at an early age. As health costs rise, you want to ensure that its benefits also increase with time. A common inflation rate is 5 percent per year. Inflation protection alternatives include simple inflation, compound inflation, or additional benefit purchases.
Guaranteed Renewable
The policy must be renewed by the insurance company as long as you pay your premium.
Waiver of Premium
This means that once you start receiving benefits, no further premiums are due.
Third-Party Notification
If you forget to pay a premium, a person you designate will be notified.
Non-Forfeiture of Benefits
If you stop paying your premiums, the policy will pay a reduced benefit for your care. This provision can add at least 10% to your premium.
Restoration of Benefits.
Maximum benefits are put back in place if you receive benefits for a time, and then recover for a certain period of time (typically six months) without receiving benefits.
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