What to look for in long term care insurance?


Just like other insurance products, it is good to do your homework first before you take the leap into making this investment. Of course, you would want to make sure that the policy you bought is something that fits your needs, lifestyle and budget.

Here are some things you should look for when you are in the market for a long term care insurance product:

  • Benefits. What are the benefits being offered by the policy? How much are the monthly/daily payments for the long term facilities? Mind you, each type of care facility may have various benefit amounts and payment periods.
  • Coverage. What facilities will be paid for by the insurance? Is the coverage just for a nursing home or will you have more flexibility in choosing the kind of care you can get? Are there any exclusions for pre-existing conditions you might have?
  • Elimination periods/Waiting periods. Is there a waiting period before specific illnesses are covered? How long? Is there an elimination period, where you have to pay out of pocket before the insurance will make the payments?
  • Insurance company. Check the reputation and experience of the company with respect to long term care policies. Ask around for people who have already claimed on the policy. You can also check with ratings services such as Standard & Poors to see how the company ranks.
  • Premium increases. How often does the insurance company increase premiums for this kind of product? This is for policies that the insurance company has already issued for the past 5 or so years. This can give you an indication of how premium increases will be for the life of your policy.
  • Guarantees. Is the policy guaranteed renewable/non-cancellable? If not, the insurance company may choose to cancel the policy if your health condition makes a turn for the worse. Is there also a free-look period, where you can cancel the policy within a specified number of days and get a full refund? How long is the free-look period?
  • Claims requirements. How is eligibility to claim benefits determined? Do you have to be hospitalized first? Do you have to be already admitted into a nursing home?

Remember that a policy is legal and binding. So you have to make sure that you know what you're getting into.

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