Long-term Care Insurance Dr. AA Neidermeyer
Candidates for Coverage • Age-driven • Age 65-69 10% require institutional care • Age 75-79 20% require institutional care • Age 85-89 40% require institutional care • Women live longer; Higher incidence of need for females. • Individuals who desire to protect a portion of their accumulated assets.
Initiation of Coverage Magnitude of Coverage Length of Time Receiving Benefits Impact of Inflation Entitlement to Benefits Company’s Financial Soundness and Engagement History Coverage Parameters
Initiation of Coverage • If applicable, policy initiates after the individual exhausts Medicare coverage. • Coverage initiates once policyholder qualifies under the policy contact. Normal interpretation is that the individual cannot perform 2 of the normal daily functions of living required to self-sustain.
Magnitude of Coverage • Investigate daily costs of care in your location. • Reasonableness would dictate that you should insure sufficiently to receive 75 -100% of your likely daily charges for care. • Interface coverage with your resources.
Length of Benefit Period • Average stay in a nursing home or receipt of care at home is three years or less. • You would usually be safe in having sufficient coverage for the period of time you would require services if you purchased a policy with a three-year benefit period. The choice is yours.
Inflation’s Impact • Medical costs are rising at approximately 10 to 15 % annually. • Your policy should include an annual inflation adjustment for your benefits. A 5% inflation adjustment is recommended to provide adequate benefits in the future.
Initiation of Benefits • While each policy is different, most contracts stipulate that benefits will be forthcoming once the policyholder cannot perform 2 of the daily living activities without assistance. • Be sure your policy covers the general diagnosis of “dementia.” • Policy should cover in-home services as well as institutional care.
Company Profile • Select a company that has been in the long-term care business for a number of years and remains in good financial standing. • At present, the industry is dominated by three providers: General Electric, John Hancock and Metropolitan have sixty percent of the existing LTC market.