Traditional Long-Term Care Insurance Plans are paid like health insurance and do not have cash value. You pay premiums each year, and you typically stop paying premiums when you are receiving benefits. There may be a plan in your state that gives you the option to pay much higher premiums for 10 or 20 years, and then be paid-up for life. However, most paid-up options have been discontinued. There are many options (riders), but let’s consider the most important choices to make first. These are the choices that need to be made before you look at riders. They are: Benefit Amount, Benefit Period, Inflation Growth, and Elimination Period.
Benefit amount – depending on company, usually range from $50 to $500/day, or $1,500 to $15,000/month;
Benefit period – usually between 2 years through 10; but it is actually specified as a dollar amount. The dollar amount is what really dictates how long the money will last. The number of years is only the minimum time, if you use up all the money by then. The plan will always last until the money is actually gone.
Inflation option(rider) – Benefit growth, usually chosen is 3% compound, but there are several more choices;
Elimination period – Deductible time period that you pay for your own care. 90 days is most popular, but some other choices are available, such as 30, 60 or 180.
Most Popular Optional Riders include:
• Shared Benefit – This is an option to share benefits together with a spouse/ partner.
• Joint Waiver of Premium– Both spouses stop paying premiums if either spouse needs care.
• Waiver of the Elimination Period for Home Care– This rider allows home care to be paid on the very first day, without being required to satisfy the elimination period.
• Calendar Day Elimination Period – Some plans already include this. The elimination period is satisfied directly off the calendar, without any receipts for care required. Other less commonly purchased riders can be discussed with your long-term care advisor. They might fit a specific need.