Has long-term care been on your mind lately? Maybe you’re getting to the age when you really need to start thinking about how you are going to pay for your long-term care. Yeah, it's a far cry from your dreams of traveling the world in your retirement, but better to be safe than sorry.
There are several options to choose from, but none of them matter much if you don’t know how long you will be getting that long-term care benefit. Let’s find out what benefit periods are in the long-term care world, and what that means for you.
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What Does Long-Term Care Insurance Cover?
Like any plan-ahead citizen, you may be wondering exactly what long-term care insurance covers. Well, while there are different scopes of coverage within each policy and each policy is different, they all cover some sort of long-term care expenses.
Those expenses can include nursing home care, in-home care, Alzheimer's facility care, respite care, hospice care and even assisted living facility care. The reason for the wide range of expense coverage is that most of the time the policyholder has the option to select which (or all) of the coverages they want.
You will typically have the choice of restricting coverages, excluding coverages, or making it as comprehensive as you'd like. You will also have control over the amount the policy will pay out per day and for what period the policy will pay out those benefits.
What Is the Benefit Period in a Long-Term Care Policy?
The benefit period is what determines how long the benefits, aka the dollar amount per day, will pay out for. You as the policyholder are responsible for choosing what is called the lifetime maximum benefit, or the total lifetime amount you want the policy to provide.
Basically, you are asked to look far into the future, predict how long you think you will need long-term care, and select that amount. Fun, right? Bet you didn’t know you’d have to have ESP in order to plan for your long-term care.
The good news is that you don’t need to have a special, future predictability sixth sense in order to make a really good decision concerning your long-term care goals. This is where a knowledgeable independent insurance agent comes in and can be a resource for you in your planning.
Let’s Talk Benefit Types
The benefit period types are pretty simple, as outlined below:
- Benefit period: The benefit period is usually set at increments of two, three or five years. Once the selected period has passed, you better hope you have, too. Kidding, but once the time’s up, it’s up. It’s best to be financially prepared in case you find yourself having to reach into your retirement funds to pay for additional long-term care expenses.
- Lifetime maximum benefit: This is the maximum amount that a long-term care insurance company will pay for covered long-term care expenses throughout the life of the policy.
An example would be if you purchased a long-term care policy and set the lifetime maximum benefit at $300,000. Once that $300,000 in long-term care is exhausted, then that’s it. At that point, if you haven't returned to your independent-living self, then you will more than likely need to dip into any retirement savings for the remainder of your long-term care.
- Unlimited benefit period: This is just how it sounds, you will use your long-term care benefits for an unlimited amount of time. In other words, until you no longer need long-term care.
You may be thinking, “Why would anyone select anything other than an unlimited benefit period?” The long and short of it is the price tag. While unlimited sounds just as good as those all-inclusive resorts, it costs a hefty premium to obtain.
However, if you are in the right tax bracket you may be just fine with allotting a larger amount to get the best possible care in your golden years. It may be worth the financial sacrifice if it means a better quality of life.
Will Your Benefit Period Vary Depending on the State Where You Live?
Typically not. Your benefits are offered by the insurance company, aka a carrier, that you've purchased the policy through. Some carriers may be more state-specific as far as what states they operate in, but this doesn't usually affect the type of coverage you get from them.
There is what is called a “partnership policy” that most states offer, where the carrier will provide a quality standard long-term care policy that has certain limits of coverage and tax deductibility in return for your proactiveness. These “partnership policies” have standards they must abide by, which would only give you better quality of coverage.
Where Can You Get Started and How Do You Find an Independent Insurance Agent?
The very best place to get started is here. You are already in the right spot and ahead of the game. Next, you will want to go to our home page and enter the basic information needed to connect you with your very own independent insurance agent. This agent will be local to you, trusted and able to help with your long-term care planning.
There are thousands of independent insurance agents. There is one in your area, in your town, and there might even be one on your street. Suffice it to say, an independent insurance agent is knowledgeable, has the ability to work with multiple insurance companies. and works for you. That's right, you.
Gone are the days of calling dozens of insurance companies on your own, taking hours and days of your precious time. Working with an independent insurance agent is the best thing you can do, saving you time and money. It's the best of both worlds, really.
Don’t leave your future up to chance, save that for your next trip to Vegas. Go on, get connected, you’ll be so glad you did.
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Board on Aging & Long Term care. July 26th, 2016. Long Term Care Insurance. http://longtermcare.wi.gov/sublink.asp?linksubcat2id=1995&linksubcatid=2699