Long-term Care Insurance

Long-term Care Insurance is designed to pay some, or all, of the costs associated with custodial care, primarily for the elderly. This type of care is not covered by health insurance or Medicare.

Policies specify when benefits begin, the daily or monthly limits, and how long benefits are available. Plans reimburse consumers for qualifying expenses.

Tax qualified plans must define benefits qualification as follows: if insured is unable to perform any 2 of the 6 activities of daily living (ADLs), or suffers from a severe cognitive impairment. Premiums are based on the age and health of the applicant as well as the benefit structure.

Over the past 20 years long term care insurance has gone through many changes. Major insurance companies saw a market opportunity and jumped into the fray. Without the 100 plus years of data that life insurance underwriters had at their disposal plan design and pricing were less certain. Plans are based on a guaranteed renewable platform meaning that insurers could not cancel or raise premiums on individuals but could on a class basis. Most who have owned LTC policies for over 10 years have experienced significant premium increases, many in the 70 to 90% range. Only a few of the insurers are currently offering plans today.

In addition to tradition LTC the industry has shifted to offer hybrid plans using other insurance platforms, with more flexible terms that may be more suitable.