Types of Long-Term Care Insurance Products
There are three categories of Long-Term Care Insurance products.
Traditional or Standalone
These affordable plans are the most popular in Long-Term Care Planning. The policies can be partnership qualified plans, which provide either a monthly or daily benefit (the amount the insurance company will pay toward your care monthly or daily) with a pool of money. The pool is the initial amount of money your policy is worth (there are some companies that offer unlimited benefits, however this varies based on state and availability).
These plans offer many optional features, including shared benefits, inflation or benefit increase options, case management, return of premium, waiver of premium at the time of claim, and cash options to name a few.
Hybrid or Asset Based Policies
These plans have received attention in the last several years for presenting a way to leverage an existing asset (money you already have) to plan for Long-Term Care. These plans will normally have cash value or a death benefit in the event care is never required. Typically, these are single premium life insurance policies (although some offer annual or multi-year premium options) or annuities with riders for Long-Term Care.
Many companies offer something similar to this, however only a few insurers offer traditional triggers for long-term care benefits without using language which limits benefits. You can also make use of a 1035 tax-free exchange if you have an existing life insurance policy with cash value OR an annuity to fund one of the plans that include long-term care benefits.
Short-Term or Critical Care Policies
These plans are ideal for older individuals (74+) or those who may have some health challenges which limit the availability of other products. Some people will also purchase this type of plan in addition to an existing long-term care policy to easily add additional benefit for a very reasonable cost.
Short-Term Care policies usually have one- or two-year benefit periods for care. They have a variety of underwriting criteria and usually will consider those who are over age 74 as long as they can answer a number of health questions which will not “knock-out” their eligibility. Otherwise they work very similarly to long-term care policies and have comparable triggers for benefits.
Critical Care policies trigger benefits based on receipt of certain diagnoses (cancer, Alzheimer’s heart attack, etc.) Some of these plans will pay more benefit if that health condition causes a need for an assisted living facility or nursing home.