What to Consider in Long Term Care Insurance Policies
It is not enough to know the scope of long term care insurance policies because more than having knowledge of these products, it’s important to know which of their components determine the benefits that you will receive in the future.
Private insurance companies offer different types of policies such as reimbursement, indemnity and those that conform to the provisions of the partnership program. Taking the nature of each of these policies aside, there are general components that you need to consider to ensure that you will not overspend on your annual premium and yet receive good coverage.
One of these important components is the maximum benefit amount as this should match the cost of care in your area. If the maximum daily benefit amount that you will get from your long term care insurance (LTCI) policy is lower than the cost of care in your area, your personal resources can be at risk.
It is for this reason that LTCI buyers are advised to identify the type of care that they will need in the future before purchasing a policy so that they can estimate the amount that they will need in benefits.
Another factor to consider in an LTCI policy is the maximum benefit period which is the specific length of time that one will receive coverage. Your present health condition and your family’s health history will help you determine your future healthcare needs. Look up your family’s health records to become aware of any sickness that you are predisposed to.
Some people end up buying the wrong policy because they only pay attention to their benefits and take the benefit period for granted. Remember that once you have reached the end of your benefit period you will cease receiving coverage except for LTCI policies that comply with the partnership program, as these make extended care possible via Medicaid.
Long Term Care Insurance Policies and Inflation Protection Riders
Aside from healthcare coverage people are also concerned with their policy’s annual premium as this has a great impact on anybody’s finances.
Besides your maximum benefit amount and benefit period, your choice of inflation protection rider shall determine the price of your policy. Most individuals who are young and financially able prefer the 5 percent compound annual inflation protection as this doubles one’s daily benefit amount quicker than the simple inflation protection.
It would cost more on your premium though, this automatic 5 percent compounded inflation protection, which is why it is advised to young LTCI buyers and not to the senior folks. Meanwhile, some people opt for another type of inflation protection rider called the future purchase which allows them to increase their benefits periodically. This type of inflation protection is cheaper than the automatic 5 percent compounded inflation protection but every time you purchase it your premium shall be based on your current age and not your age when you purchased your policy. In other words, your premium can go higher every time you buy the future purchase option.
To avoid overspending on the annual premium seek advice from a trusted LTCI agent, as he can definitely elaborate on the factors that you should consider when shopping for long term care insurance policies.
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