Long Term Care Insurance: Things You Should Know

Things You Should Know Aboout Long Term Care Insurance

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Long-term care insurance is a type of insurance that offers protection to an individual on the expenses that arise when he/she needs long term assistance or care due to the inability to perform basic daily activities. This article brings to life everything you need to know about long term care insurance.

Most individuals that are nearing their age of retirement start thinking of ways to safeguard their savings. Once you retire, your salaried income stops coming in and you have to be dependent on your savings and investments you’ve made. Research reveals that more than 60% of individuals above the age of 65 require some type of assistance, care, and support during their lifetime. Individuals may not be sick or ill in the literal sense, but may not be able to carry out their basic day-to-day activities on their own. Long term care insurance is beneficial for people in their old age.

Individuals unable to perform their daily activities such as eating meals, going to the toilet, walking, having a bath, dressing up, or getting out of a bed or a chair need assistance with these activities. The cost involved in providing long term care on a private nurse, caregiver, housekeeper, adult daycare specialist, or a therapist can be exceedingly high and clean up an individual’s savings.

Savings are extremely important in old age. Individuals that avail of long-term care insurance maximum benefit policies are compensated for assisted care 24 hours a day, every day of the week. The insurance company pays for private nurse, caregiver, therapist, housekeeper, and companion, in accordance with the terms of the policy.

Long-term care insurance provides coverage on

  • Nursing
  • Hospice Care
  • Home Care
  • Respite Care
  • Daycare for Adults
  • Alzheimer’s assistance
  • Assisted living

The benefits this type of insurance has to offer can be availed in the event an individual has a cognitive impairment, or needs assistance, care, and help for day-to-day activities. All the daily activities of the individual such as walking, bathing, shifting from the bed to chair, continence, toileting, and feeding are performed by skilled nurses, housekeepers, and caregivers who are compensated by the insurance company.

The benefits of the policy are in accordance with the type of policy you avail. A maximum limit policy on long-term care insurance will bear the expenses of different services availed 24 hours a day, each day of the week. Individuals can avail of individual policies or group policies. Individual policies are preferred as they offer more benefits. The deductible charged on group policies in most cases is high, along with few benefits. An individual with a long-term care insurance policy is eligible for the benefits of the policy in the event that she/he has a cognitive impairment or needs care due to inability of performing (ADLs) activities of daily living.

If you are a couple that wants to avail of long term care insurance, make sure you opt for individual policies instead of group policies as most insurance companies offer discounts to couples on individual policies. As the risk of insurance on group policies is higher, the deductibles are high and the benefits few. Premium payout plans offered by insurance companies are

  • Monthly
  • Quarterly
  • Semi-Annual
  • Annual

Policies have an elimination period which may be between 0-90 days. The elimination period is the time during which the individual makes payment for the care or assistance provided before receiving the benefits from the insurance company. Individuals that make claims on the policy may be required to maintain proof of service availed and the number of days paid care was used. Different policies offer options that comprise of restoration of benefits, non-forfeiture, and spousal survivorship. Some organizations or firms may provide their employees with a long-term care insurance policy. Long-term care insurance provided by private companies is gaining steady momentum.

Types of Long Term Care Insurance

Individuals can avail of two major types of long-term care insurance policies, (TQ) Tax qualified policy and (NTQ) Non-tax qualified policy. Although both types of policies offer substantial benefits, individuals prefer tax qualified policies as the benefits are non-taxable. There is a certain degree of complexity in deciding whether to opt for a (NTQ) Non-tax qualified policy or a (TQ) Tax qualified policy.

Tax qualified policies are availed by most individuals as the benefits pertaining to this policy are not taxable, unlike a non-tax qualified policy where the individual may get a tax bill that is unimaginably steep for the benefits provided. Both tax qualified and non-tax qualified policies have their pros and cons. It is recommended that individuals seek help and counsel from experts in this field in regard to pricing, tax deductions, and the limits of the policy.

The different types of Long term care policies individuals can opt for are

  • Tax Qualified Policy (TQ)
  • Non Tax Qualified Policy (NTQ)
  • Traditional Policy
  • Combination/Hybrid Policy

Factors that Determine rates on Long-Term Care Insurance

While various aspects influence rates on long term care insurance, the major factors that determine rates on this type of insurance are

  • The age of the individual
  • The duration of payouts
  • The elimination period
  • Inflation protection
  • Health rating

Although long term care insurance is availed by individuals who are on their way towards retirement, this type of coverage is not restricted to a particular age group. A lot of young individuals are purchasing long term care insurance to safeguard their future.

Individuals qualify for benefits in accordance with the terms of their policy, in the event that he/she needs help or assistance because of inability to perform activities of daily living. The elimination period may vary in accordance with the type of policy. A long-term care insurance policy makes sure your assets are protected from the high cost of expenses involved in care, and helps you to be socially independent. Make sure you carefully scrutinize the benefits that are included and excluded in different policies, and choose a policy that suits your need.    


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  • goldstay  15-11-2017
    For me, the most important factor of long term insurance is age. This is the reason why I try my best to educate millenials to avail insurance as early as their age. When one gets older, one will not know of the high risk of acquiring diseases. I am also a Financial Advisor and I sell investment-linked insurance in our country. Your article gives me more enlightenment and additional information about insurance. Thank you and keep on writing. :)
    reply 2
    • realityspeaks  17-11-2017
      You're absolutely right. We should safeguard ourselves from the unforeseen future. Availing of insurance at an early age is essential. I'm glad you found my article helpful. Thank you.
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