Types of Long-Term Care Policies
There are several different types of long-term care policies. Most of them are known as “indemnity” or “expense incurred” policies. An indemnity, or “per diem” policy pays up to a fixed benefit amount regardless of what you spend. With an expense-incurred policy, you choose the benefit amount when you buy the policy. You are reimbursed for expenses for services for a fixed dollar amount per day, week or month.
Today, many companies offer “integrated policies” or policies with “pooled benefits”. This type of policy provides a dollar amount to that can be used for different long-term care policies.
At this time there are no policies that guarantee to cover all expenses in full.
You will typically have a choice of your daily benefit amount. This could range from $50 to more than $300 a day for nursing home coverage. At-home care benefits may be less than the nursing home benefits. The per day benefit you buy may not be enough to cover higher costs in future, so most policies offer inflation adjustments. In this case, the initial benefit amount will increase automatically each year at a certain rate, and it compounds over the life of the policy.
Some life insurance policies offer long-term care benefits. In that case, a portion of the life insurance is paid to the policyholder for long-term care services. Each insurance company is different, so you will need to check to make sure that your life insurance provider offers this service. Some companies will offer the benefits to all beneficiaries, and some will only offer it to new clients.