Long term care insurance (LTCi) is a type of disability plan that provides the caregiver of a sick, injured, or frail person an income reimbursement plan to pay for services. Services include home health care, assisted living facilities, and skilled nursing care (nursing home).
LTCi also provides financial protection by creating a private pay opportunity, allowing assets and income to be protected for household use and the heirs and not spent on costly long term care expenses.
LTCi is a reimbursement plan and has an elimination period as well as a cost of living adjustment (COLA). The elimination period can range from 0 to 30, 60, 90, or 180 days. The COLA allows the policy to maintain inflation and ranges from compounders of 3, 4, and 5% to simple and consumer pricing and urban index (CPUI) methods.
The premium will reflect the strength and benefit period of the policy coverage.
The benefit period is the anticipated length of coverage needed.
The daily or monthly benefit amount multiplied by the length of coverage determines the total reimbursable benefit.
The COLA helps the benefit amount grow, maintaining inflation.
By not utilizing the daily or monthly benefit to its full potential, the benefit period can be lengthened.