Traditional long-term care insurance (LTC) helps cover costs that are not generally provided by health insurance, Medicare, or Medicaid. Long-term care insurance helps provide for the cost of chronic illnesses, disabilities or other conditions when care is required over an extended period of time. This insurance may help provide skilled care for daily activities such as bathing, dressing and eating from nurses, therapists or other professionals.
Traditional long-term care insurance is great for clients looking for the following:
Traditional long-term care insurance usually provides the most comprehensive coverage for the cost. Long-term care insurance can cover home care, assisted living, adult daycare, respite care, hospice care, nursing home care, and Alzheimer’s facilities. If home care coverage is purchased, long-term care insurance can pay for home care, often from the first day it is needed.
Many traditional long-term care policies use the person’s inability to perform certain “activities of daily living’’ (“ADLs”) as one trigger to determine if the policyholder is eligible for the LTC benefit. ADLs are (i) bathing, (ii) continence, (iii) dressing, (iv) eating, (v) toileting, and (vi) transferring (i.e., moving from one place to another). Most long-term care policies will pay benefits when one cannot do two of the six activities of daily living, but this may vary depending upon the individual’s policy.
Another trigger that can be used is when the policyholder needs substantial assistance for a designated period of time due to “cognitive impairment”. Premiums paid on traditional long-term care insurance policies may also be eligible for an income tax deduction.
Hybrid or Asset based long-term care insurance (“LTC”) aims to help cover the cost of treatment for chronic illnesses, disabilities or other conditions that need assistance over an extended period of time. This insurance would help provide skilled care from nurses, therapists, or other professionals for daily living activities such as bathing, dressing, and eating.
Asset-based LTC policies are commonly referred to as Hybrid, Universal Life Insurance with LTC benefits. These policies provide a flexible LTC benefit while still providing a death benefit, return of premium features, and access to cash value. Long-term care benefits are limited to a maximum amount but premiums are usually guaranteed and don’t increase.
When long-term care is needed, the life insurance death benefit or annuity value is accessed to pay for qualifying expenses. The asset-based policies have a death benefit payout that is made to beneficiaries at the time of death if the policy has not been exhausted for long-term care expenses.
Asset-Based/Hybrid Long-Term Care May be Helpful for Clients Who: