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Greenhaven Marketing
Po Box 98
Anoka, MN 55303
Phone:
763-421-1193
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Long- Term Care Insurance:
The Essentials^®   3
  

How Long Will I Need Coverage?

Q. How long can I expect to need coverage?
A. The average stay in a nursing home is estimated to be 2.4 years.8 Some people stay much longer or require an extended period of home care before they require admittance to a nursing home. There are a number of factors that should be considered in selecting a benefit period – your age at purchase, your current health, your family’s health history, the increase in life expectancy and even your marital status.

By the year 2030, the over 65 population
 will more than double to 70 million.⁹

What About Benefits?

Q. How do I become eligible to receive benefits?
A. Typically, you become eligible when you are unable to perform two out of the six Activities of Daily Living (ADLs).

This number may vary from insurer to insurer. Also, the period of time when you are unable to perform the ADLs should be anticipated to last for at least 90 days. You will also need to have satisfied the elimination period. Policies start to pay once you are eligible and have met the elimination period. You may also become eligible when you have a severe cognitive impairment (for example, you develop Alzheimer’s Disease).

Q. Who determines when I am eligible for benefits?
A. Under a Tax-Qualified long-term care insurance policy, a licensed health care practitioner must certify that you are chronically ill and that a Plan of Care, including the qualified long-term care services you need, is in place for you. Being chronically ill means that you are unable to perform the requisite number of Activities of Daily Living, according to your policy, for a period that is expected to last for at least 90 days or you have a severe cognitive impairment.

Q. What happens to my benefits if I stop paying my premium?
A. If you stop premium payments, with most long-term care insurance policies, your policy terminates. Most policies offer an option called “nonforfeiture” which preserves a part of your benefits even if you should stop paying premiums. Typically this option offers you a benefit equal to the premiums you’ve paid. And also typically, you need to keep the policy in force at least three years before you’re entitled to this “nonforfeiture” benefit, usually available at an additional cost.

Policies also include “Contingent Benefit Upon Lapse” as a consumer protection. This means that if your current premium increases over a certain level outlined by the National Association of Insurance Commissioners, and you decide you cannot afford the new premium, you can choose one of two benefits. One benefit provides a reduction of your currents policy’s benefits so that your premium will not increase. The other benefit allows you to reduce your policy’s benefits by shortening the original benefit period, thereby converting the policy to a “paid up” status. Of course, you may elect to keep your policy’s benefits the same and pay the higher premium.

A good rule of thumb is this--if you purchase a long-term care insurance policy, plan on paying the premium until you need benefits. Most policies do not expect you to pay premiums
once you begin to collect benefits, but the way in which this works may differ from policy to policy, so be sure to know
what your policy provides.

Q. What is a “return of premium on death” benefit?
A. The “return or refund of premium on death” benefit will return or refund all or part of the premiums you paid, and in most cases, any “refund” is paid to your estate. This benefit varies from policy to policy. Some policies require payment for a specific number of years before this benefit can be received. Others may only refund premiums up to a specific age. 

What Else Should I Know?

Q. Can I change my mind if I buy a policy?
A. Generally, you will have 30 days from delivery date to review the policy and return it and get your money back if you find that it does not meet your needs. This period of time is called the “free look period.”

Q. Can my premiums be raised?
A. Most long-term care insurance plans are guaranteed renewable. This means that premiums cannot be raised solely in response to the number of claims an individual has filed, nor can they be raised solely because of age or change in health.

Companies whose policies are Guaranteed Renewable may increase premiums on policies on a class-wide basis, usually only with state approval.
 

Q. How can I evaluate a long-term care insurance company?
A. Look for a company that achieves consistently high ratings from the leading insurance company rating agencies, such as Standard and Poor’s (www.standardandpoors.com), Moody’s (www.moodys.com), or A.M. Best (www.ambest.com). These ratings represent the overall financial stability of the insurance company.

It is important to base your purchase on the company’s reputation and benefit offerings. Premiums that are less expensive but don’t offer the coverage that is best for you won’t always save you money in the long run. Monthly premiums that start out much lower than others may not always stay low.
 

Q. How can I obtain detailed information on long-term care insurance?
A. You can obtain more detailed information on long-term care insurance in several ways — through an association, your employer, an insurance agent, or via the Internet. You may also contact your state’s Department of Insurance or local Area Agency on Aging. As with any major purchase, being an informed consumer is the best way to make a decision.24