When shopping for a long term care policy, terms, provisions, and fine print can become confusing. After looking at two or three policies, they may all start to look the same. It can be frustrating determining the best one that will fit your needs and your budget. Here are a few of the key features to look for in any long term care policy.
Look for a policy that will pay for care in a nursing home, assisted living facility, or at home.
Pay attention to the conditions that must be met before the policy can be used. In most policies these include:
The inability to perform two or three specific "activities of daily living" without help. These include mobility, bathing, dressing, eating, and/or toileting.
Cognitive impairment. See if the policy lists specific diseases that are or are not included such as stroke and Alzheimer’s. Be sure to notice if other mental impairments are included.
Certification by a doctor.
Some policies require a hospital stay of at least three days to get benefits. This requirement should be avoided.
A waiting period is a time period in most policies in which the policy will not pay benefits. In essence, the insurance company is waiting to see if you recover more quickly than expected. If you do, you will not get reimbursed.
If you do not, then the policy will begin to pay for expenses after the waiting period. In general, the longer the waiting period, the cheaper the policy.
Once benefits begin, the benefit period for any policy may range from two years to a lifetime. Research the average nursing home stay, or your family medical history to determine the best term of coverage.
You can keep premiums down by electing coverage for three to four years, instead of a lifetime policy. A policy with guaranteed renewals is often a priority, your price may increase, but this provision will guarantee continued coverage.
Most of a per-day maximum and a lifetime maximum, look at the amounts and determine which policy provides the most coverage per day, which will allow for better care. Other policies have a "pool of benefits" that can be used as needed, which may be helpful, but must be budgeted or allocated carefully by the policy holder.
Generally, you can expect to be paid on a reimbursement basis. Few policies pay on an indemnity basis, meaning you get a payout and then use it as needed.
Two other features to look for are the waiver of premium provision, so that no further premiums are due once you start to receive benefits, and the third-party notification, so that a third-party will be notified if you forget to pay a premium which can save you from being dropped for non-payment.
Inflation protection is an important feature. Inflation can make a policy purchased today worth less than half of its value in twenty years. A good inflation provision compounds benefits at five percent a year.
By Matt Reynolds - Google+