Long-term care insurance provides financial benefits for skilled care, intermediate care, and custodial care in qualified long-term are (nursing) facilities. Some policies also cover home health care.

Common to most long-term care polices are the following:

• Amount of the benefit: Most policies pay a fixed dollar amount for each day you are eligible for the benefit; e.g., $90 per day.
• Inflation protection: = Since costs inevitably increase, a policy without a provision for inflation or an inflation rider may be outdated in a few years. There is an additional cost for this provision.
• Guaranteed renewability: + This important provision will prevent the insurance company from canceling your policy regardless of your health for as long as you continue to pay the premium when due.
• Waiver of premium: = Some policies will waive the future premiums after you have been in the nursing home for a specified number of days, e.g. 90 days.
• Prior hospitalization: - This provision requires one to be hospitalized (for the same condition) prior to entering the nursing home or no benefits will be paid under the policy.
• Place of care: = Does the policy require that the nursing home be licensed or otherwise certified by the state to provide skilled or intermediate nursing care? Must the facility meet certain record keeping requirements?
• Level of care: There are three general levels of care.
• 1) Skilled Care: Daily nursing and rehabilitation care under the supervision of skilled medical personnel; e.g., registered nurses under a physician's orders.
• 2) Intermediate Care: Similar to skilled care, but requiring only intermittent or occasional nursing and rehabilitation care.
• 3) Custodial Care: Help with daily activities including eating, getting up, bathing, dressing, use of toilet, etc. Those performing the assistance do not need to be medically skilled but the care is often based on a physician's certification that the care is needed.
• Pre-existing conditions: = Most policies limit coverage of pre-existing conditions to discourage persons who are already ill from purchasing the policy. Many policies will provide benefits if the pre-existing condition was overcome six months or more prior to applying for the policy. Also, some policies will not pay benefits if the pre-existing condition re-occurs within six months after the effective date of coverage.
• Deductible or waiting period: = Most LTC policies require you to pay your own way for a specified number of days (generally ranging between 0 and 120 days) before the insurance company will begin to pay benefits. Of course, the shorter the waiting period the higher the cost.
• Period of confinement: = This important provision indicates how long a person can stay out of the nursing home before being readmitted for the same condition, without being required to go through a new waiting period (or deductible). The period should typically not be less than 90 days.
• Alzheimer's Disease: = Most policies now include coverage for "organic brain disorders" like Alzheimer's disease. However, problems of this nature often do not begin with a visit to the hospital and could, therefore, be excluded if the policy requires prior hospitalization.
• Home Care: + Does the policy offer home care coverage? Some companies offer it as a rider to the policy for an additional premium. Make certain that it supplements Medicare coverage and does not just duplicate it.
• Company rating: + Companies should be financially sound and have a reputation of treating policyholders fairly. Independent ratings services such as A.M. Best, Standard&Poor's, and Moody's should be evaluated before making a purchase of the coverage since claims paying ability is ultimately the only product and insurance company offers. As policies improve, better companies will be more apt to allow you to upgrade to a newer policy.

Note: The potential need for long-term care is a genuine risk. As the population ages greater numbers of us will require either institutional care or professional at home care. The individual who plans ahead will examine long-term care insurance to see if it has a place in his or her overall plan. Once a disabling condition appears it may be too late to insure. Therefore, plans must be made early. Generally those 50 years and older begin to take a hard look at long-term care as they see the need unfold with their parents. There is not a perfect long-term care policy. Traditional indemnity policies are of the use-it-or-lose-it variety. That is, if a claim is never made all premiums are lost. Other policies build cash value and can be surrendered or borrowed against to recover some of the premiums paid. It is advised that professional advice from an insurance specialist should be sought to find the right fit for your circumstances.

KEY for above provisions:

• Recommended +
• Personal preference =
• Undesirable -