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Long term care policies are highly customizable in terms of the amount of
coverage your wish to purchase and optional cover ages and benefits included. Premiums
for long term care insurance vary in relation to these selections. The amount of
coverage payable under a long-term policy depends in large part on the amount of
coverage you choose to purchase. This is generally expressed in terms of a daily
or monthly benefit amount, a maximum benefit about and the elimination period.
Most policies bay benefits on a daily, weekly or monthly basis. When you purchase
a policy, you select a benefit amount for nursing home coverage. For example, you
could select a benefit about from $50 to $350 per day for care in a nursing facility.
The benefit amount payable for home or community care is generally based on a percentage
of the benefit payable for care in a nursing facility. For example, if you select
a daily benefit of $200 for care in a nursing facility your benefits for home or
community care may be 50%, 75% or 100% of that amount, depending upon the policy
and the options you select. It is very important that you understand and consider
the cost of care in you community in selecting benefit amounts for long term care
insurance.
Most policies limit the amount of coverage that is payable over the life of the
policy. This limit is often expressed in terms of a maximum benefit period, like
3 or 5 years. For example, if you selected a daily benefit amount of $200 and a
maximum benefit period of 3 years, then the maximum benefit payable under the policy,
before considering elimination periods and certain other adjustments and limitations,
would be $219,000 ($200 x 365 days x 3 years).
Elimination periods work like deductibles. Your benefits will generally not start
on the first day that you receive care in a nursing facility or at home or in the
community. Rather, your benefits start a specified number of days after you start
receiving care. Some policies allow you to select a 0 day elimination period, but
most offer elimination periods of 20, 30, 60, 90 or 120 days. The longer the elimination
period, the lower your premium, but the more out of pocket expenses you will incur
before your policy benefits start.
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Long term care polices offer the option of inflation protection and most experts
agree that, except in rare cases, some level of inflation protection should be chosen
in all cases. Inflation protection increases the daily benefit amount every year
in order to keep abreast with the rise in the cost of care. Without inflation protection,
the benefits payable under a policy purchased today my not be sufficient several
years from now when care is needed. Most plans offer the option of either compounded
or simple interest inflation protection:
Here the daily benefit is increased annually at a compounded rate, generally by
5%. Each year 5% is added to the previous year's benefit amount to arrive at the
new benefit amount. To illustrate this, assume that the daily benefit amount in
the first year is $ 100, then in the second year it will be $ 105 ($100 x 1.05),
in the third it will be $110.25 ($105 x 1.05) and so on.
In this case, the original daily benefit amount is increased by a fixed
amount annually. Using the above example, a $100 daily benefit, with 5% simple interest
adjustment for inflation, will become $105 in the second year, $110 in the third
year and so on.
Texas Long Term Care Insurance
Florida Long Term Care Insurance
Connecticut Long Term Care Insurance
New York Long Term Care Insurance
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