The average American is said to be “insurance poor” because we tend to insure just about everything. You likely have an auto insurance policy and possibly health, homeowner’s, and life insurance. At some point you may consider adding long-term care insurance to your insurance portfolio. Purchasing long-term care insurance is an excellent idea, if you can afford it and if you have a firm understanding of what you are purchasing. Many of the terms relating to long-term care insurance are unique to that type of insurance, so they may be new to you. Given the fact that long-term care insurance is usually part of your larger estate plan, it is best to consult with your Illinois estate planning attorney if you have specific questions about a potential policy. however, it may also help to gain a better understanding of some common long-term care insurance terms.
• Activities of daily living – things such as bathing, eating, and dressing. Used to determine eligibility.
• Alternate care benefit – benefits that provide services which allow you to live somewhere other than a nursing facility.
• Benefit triggers – used to determine eligibility for benefits. Most policies look for your inability to perform certain “activities of daily living” (ADLs), such as bathing, dressing, or preparing food.
• Daily benefit – the amount the plan will pay out in benefits each day. Typically, this ranges from around $50 – $350. The daily benefit amount may also vary depending on the type of service, such as $100 for in-home care and $200 for nursing home care.
• Duration of benefits – this refers to the limits of the benefits you can receive and may refer to a time limit or a dollar amount limit. For example, you may be entitled to benefits for up to two years or up to $150,000.
• Elimination period – this is a very important aspect of any LTC policy. Also known as the “waiting period” it refers to the amount of time you must wait before your policy will start paying out benefits. Typical times range from 20 to 100 days.
• Exclusions – conditions and/or services that are specifically not covered.
• Guaranteed renewability – ability to renew your policy and continue to receive benefits despite any changes in your health.
• Inflation rider – protects against inflation by increasing benefits along with the cost of living increases.
• Lifetime maximum benefit — the total pool of money payable for covered long-term care services received while insured.
• Prior hospitalization – refers to whether or not a hospital stay is required before benefits will be paid out.
• Non-forfeiture option – if you stop paying your premiums for any reason, a non-forfeiture option allows you to receive a reduced benefit based on the amount you have already paid in to the policy.
• Waiver of premiums – provision detailing when you do not have to pay premiums because of a claim status.
If you have additional questions or concerns about long-term care planning, or your Illinois estate plan in general, contact the experienced Illinois estate planning attorneys at Nash Bean Ford & Brown, LLP by calling 309-944-2188 to schedule your appointment today.