What Are Long Term Care Insurance Premiums?
There is vast range of long term care policies offered from company to company to suit individual needs
. However, you must be able to understand and differentiate what those policy embraces, since companies have different underwriting procedures and definition on LTCi policies and premiums. A financial advisor that is well versed in LTCi can help you find the best deals and save on your premiums.
You must have heard the term premium for the nth time, but do you know what premium means or covers in long term care? An insurance premium is the amount of money charged by companies for coverage, depending on the needs of the policyholder. It is strongly recommended to get quotes from the insurance provider before paying the premiums. The common coverage included in the premiums are as follow:
Age and Health Many people dont know that LTC policies can be purchased as early as age 15 until the age 85. Its common for people to wait for their retirement yearsthe time they consider insuring themselves. However, the older you are when you buy the premiums means the costlier your premiums will be. For instance, a 55-year-old might pay twice or thrice the price of the premiums of a 50-year-old. Also, expect a much higher premiums if you are suffering from chronic illness or disability. Keep in mind that insurers have different underwriting procedures; a company may refuse granting coverage due to health condition. It would be better to purchase policy before serious health problem arises; this is because the premiums will remain the same even after the individual purchased the policy.
Daily or Monthly Benefit Amount This is the amount paid for long term care costs either on daily or monthly maximum. A benefit of $100 a day will cover for $100 long term care services.
Benefit period This is the length or period the policy will pay for the benefit amount as determined in the number of years.
Elimination period This typically works as deductible. This states the number of days, normally from 30, 180, or 360 days, the insured must pay for his or her care before LTC kicks in. Most insurance companies say that the longer the elimination period is the cheaper the premiums will be. However, it is best to determine how likely you are to finance your care using your personal resources. If you have enough resources to cover the care, then get at least 180 days elimination period.
Inflation Protection This feature is only optional or considered as rider. The inflation rider increases the benefit amount year to protect the insured from heightening costs of long term care. You can buy an inflation protection that increases 5% compound annually. However, as long term care rapidly increase, the 5% compound wont suffice to stay abreast with the costs in the succeeding years. Most insurers recommend the inflation protection to policyholders age 75 and above.
You might have noticed that most long term care insurance policies have no fixed price. Yes, they dont. This is because the individual can freely design the policy coverage based on his or her needs and condition. But most insurance companies have this creed: the younger and healthier you are, the less expensive your premiums will be.
by: Marcia Cross
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