Should You Pay for a Longer Benefit Period?
Should You Pay for a Longer Benefit Period?
Your long term care insurance benefit period is a very important aspect of your policy not only because it is one of the major determinants of your annual premium, but it sets the duration of your long term care (LTC) coverage from your policy.
When it comes to the underwriting process, insurance companies marketing long term care insurance (LTCI) policies differ but they stand on common ground when it comes to the major components of a policy that greatly affect its premium.
For instance, if a policyholder chooses a high maximum daily benefit amount then this would equate to a high annual premium. Long elimination periods would be equivalent to lower premiums while shorter ones equate to higher premiums. Meanwhile, the rule for the benefit period is opposite of the elimination period’s. So, if you’re going for a longer benefit period like five years or so you have to fork over more money annually while a short benefit period would require a smaller annual premium.
Though it is good to study the different ways that will allow you to cut back on your LTCI’s policy’s annual premium, it is not advisable to reduce the amount of your daily benefit, length of benefit period, and nest egg altogether just so you can save more on the annual premium. Otherwise, you might end up facing higher out-of-pocket LTC costs in the future.
Before you decide to adjust anything in your policy, reassess your future health care needs and budget. Look at the possible consequences that you may have to face if you do this or that.
How to Choose Your Long Term Care Insurance Benefit Period
There are four important factors that you need to study before deciding on your policy’s benefit period and they are the following:
- Your family’s health history
- Your present health condition
- Your age
- Your Budget
If you notice, topping the list above is your family’s health history because professionals in the health care industry acknowledge that a person who is genetically predisposed to a certain health problem may or may not acquire that specific illness. The purpose of finding out if you have a genetic predisposition to a certain type of malady is to prepare yourself in case you acquire the condition in the future.
Your present health condition is as important as your family’s health history because your environment and lifestyle can also affect the state of your health.
As for age, it is important to remember that if you apply for a policy before you hit the line of 60s rest assured that you will have the privilege to enjoy a lower premium rate, and thus you have the freedom to go for a longer benefit period. On the other hand, if you’re past the age of 60 when you purchase your policy, a five-year-benefit period will not be reasonable unless you can afford to fork out $6,000 to $10,000 worth of premium, which now leads us to the budget.
Anyone who has more than enough money to spend for his policy’s annual premium without sacrificing his current lifestyle can by all means settle for a longer or even unlimited long term care insurance benefit period. Meanwhile, if you are like most Americans who are living on a strict budget, a modest plan won’t hurt.
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