Understanding LTCi

LTC insurance can appear complicated but doesn't need to be. In any case, I'll be there to explain every step of the way and make it plain and simple for you to understand.

Besides a well designed policy, I advise you PICK A VERY STRONG COMPANY as well. You want the company to still be around, serving its LTC clients, even 20-30 years from now. So pick a company with strong financial ratings, such as A or A+ from A.M. Best, one of the best known ratings companies. I do business only with those companies I've concluded have the highest chances of being around in 20 years or more, and meet all the criteria I state below.

WHAT I LOOK FOR IN A GOOD LTC COMPANY:

* STRONG FINANCIAL RATINGS like A++, AAA or AA, and huge reserves in the BILLIONS, in order to weather any LTC storms. (See my COMPANY RATINGS link page)

* A GOOD REPUTATION for PAYING CLAIMS with little or minimal hassle

* HAS A STABLE PREMIUM RATE HISTORY (zero premium increases is ideal, though a company with just one premium rate increase is also acceptable).

* THEY HAVE A MINIMUM OF 10 YEARS EXPERIENCE and COMMITMENT IN THE LTC FIELD.

* THEY HAVE POLICIES THAT REFLECT CREATIVE THINKING AND UNDERSTANDING OF THE TRENDS AND ISSUES IN LTC.

No one company's policy is the "best" product for everyone. Each company appears to have their niches where they serve most effectively. Each one has strengths and weaknesses. I will tell you both - strengths and weaknesses - of the various companies when we meet.

WHAT TO LOOK FOR IN A GOOD POLICY:

1. The AMOUNT OF BENEFIT: The best-designed policies today now show the benefit in monthly terms instead of daily terms ($4,500 a month benefit, instead of $150 a day benefit, for example). These figures are usually based on the amount you'd expect to pay for care in a facility (though it can also be used for home care in most situations). You'll probably end up being less out of pocket with a Monthly benefit than with a daily benefit. Ask me to explain why when we meet. Be sure to cover the bases adequately by covering the cost of care in the city or part of the country where you would likely be when you are in claim and receiving care. Cost of care in Alaska and the Northeastern states are far more expensive than the Northwest or Midwestern USA, for example. I will show you the amount that makes sense for your community (as these amounts vary considerably even right here in the Northwest).

Most of my clients in the Northwest are buying between $130 to $175 a day benefit amounts, or $3,900 to $5,200 BENEFIT (not premium) per month.

2. THE LENGTH OF TIME OF CARE COVERED: It's hard to know 100% now how long you may need benefits to be paid at time of claim. You don't want coverage to run out, if possible. I help you determine the right amount of benefit period by assessing your family history, budget, and many other factors. I can show you a premium cost comparison for different maximum benefit amounts and length of care times for which benefits can be paid. You can buy "unlimited lifetime" care from most (but not all) companies. Or you can purchase enough coverage for 2 or more years of care. Most companies offer choices of 2 years, 3 years, 4 -5 - or 6 years or unlimited time of care. Covering two or three years of care will be considerably cheaper than buying unlimited coverage, but will it be enough for you? Let me go through all the steps I need to with you, in order to help you determine the right amount of time to cover with LTC insurance. You can use this benefit for even separated episodes of care as long as you have benefit dollars for which you qualify for Long Term Care.

Most of my male clients are purchasing 3-5 years of care, and most of my female clients are purchasing 4 years of care to unlimited lifetime coverage.

3. THE LIFETIME BENEFIT AMOUNT or "POOL OF MONEY" available for your care. This could be as little as $73,000 perhaps, or unlimited. Most of my clients are purchasing at least $190,000 and up to $300,000 of lifetime benefit, plus the inflation rider (see #4). With most LTC companies I represent, what you don't use "stays in the pot" for future use. I'll be sure to make this plain and understandable when we meet.

4. INFLATION PROTECTION rider (also called "the Benefit Increase Option"): If your monthly and lifetime benefits do not keep up with inflation, you may someday own a policy which can't pay the bills. There are various inflation options I'll show you. Most companies offer options of either no inflation protection, simple 5% inflation protection, compound 5% , or deferred inflation options. Most of my clients are choosing the 5% compound inflation protection. If you're younger than 70, or expect to live more than 15-20 years, I definitely recommend the 5% compound option, which doubles your benefits in just 15 years. Of course inflation protection increases the cost of the policy, but your policy won't be worth much in 15-20 years without inflation protection.

5. THE ELIMINATION PERIOD. This tells you HOW SOON the policy starts paying benefits to you. This is a little bit like a deductible, though not exactly like it. They call it the "elimination period" because these are the number of days YOU have to pay for care (or days you must "eliminate" before benefits will be paid to you). For example, when you have a car accident, you can't get your car out of the shop until you pay a deductible figure like $500 perhaps. LTC "deductible" or Elimination Period, is actually the number of days of care you pay for before the policy starts paying you. I'm not a fan of long deductibles, and let me explain why when we meet. Most of my clients are buying short elimination periods - like 0, 30, 60 days - not 90 days. Be sure to ask me why.

Some companies require these Elimination Period days to be only days when a chargeable service is actually incurred, day for day. Better plans (in my opinion) either waive this Elimination Period altogether for home care or have means to satisfy them quickly. A couple carriers will count up to 7 elimination period days per week even if there's just one day of care charged that week. Also be sure your Elimination Period has to be satisfied just ONCE in your lifetime. That IS the case with almost all of the carriers' policies I represent.

6. NICE FEATURES TO HAVE INCLUDED or at little extra cost (these vary from company to company): Waiver of Premium during claim; Restoration of benefits; Bed Hold days; Respite care; Home Modifications, ability to use non-agency personnel for home care; Survivorship benefits.

NOTE: Almost no companies (very few) allow family members to be paid caregivers of the policyholder.

Besides these basics, there are many more items to discuss, and when we're done, you'll walk away with a head full of LTC knowledge and understanding.

"WHAT WILL the PREMIUMS COST ME?"

The cost of your premium will be a reflection of how much benefit you bought, for how long, and what elimination period you bought and what extras, or riders, you added. Other factors that affect price include your AGE, whether you're MARRIED or not, which company's product you bought, and any DISCOUNTS for which you may be qualified. I STAND READY TO HELP YOU.

HOW AND WHEN ARE BENEFITS TRIGGERED?

Benefits are triggered once you become a chronically ill or frail individual unable to perform without assistance, at least 2 out of the 6 ADL's - or Activities of Daily Living - OR need substantial supervision due to cognitive impairment. Also, this care must be expected to be required for at least 90 days. The six ADL's are bathing, toileting, dressing, eating, transferring, continence. Be sure your policy has all SIX, and not just five! All of the policies I represent have the six ADL's.

TAX QUALIFIED PLANS

All the plans I represent are tax qualified plans. This certifies that the benefits you may someday receive will never be taxed as income.

FREE SHOPPER'S GUIDE TO LONG TERM CARE INSURANCE

If you'd like more information from the National Association of Insurance Commissioners, I'll gladly send you a free copy of their Shopper's Guide to Long Term Care Insurance. Just fill out the Personal Consultation Request form, and mention this guide in the notes field, OR download the Guide here (NOTE: Requires Adobe Acrobat Reader to view, visit our Literature page for more details).