| Long term care insurance policies have an | | | | odds are very much in favor of never needing a |
| important component called a benefit period which | | | | policy that would pay unlimited years. |
| greatly affects premium costs. This article | | | | So compared with a policy that offers an |
| discusses what I call | | | | Unlimited benefit period, you can get a much |
| "Short and Fat vs. Long and Skinny LTC Policies". | | | | higher daily/monthly dollar benefit that you are |
| That is right -- Short and Fat LTC policies! So | | | | MUCH more likely to actually use and benefit |
| what is a benefit period anyway? | | | | from. Any unused dollar benefits will extend the |
| The benefit period is the number of years that | | | | number of years of your benefit period and not |
| ONCE you go on claim (need help in bathing and | | | | be lost. |
| dressing or have some cognitive impairment | | | | Also you are much more likely to use a higher |
| (Alzheimer's or similar ailment) that the insurance | | | | dollar amount for 2-4 years than having to pay |
| company will pay the daily or monthly benefit that | | | | extra money out of your pocket during care with |
| you chose when you applied for the policy. | | | | a benefit period that is probably never going to be |
| So if you bought a benefit period of say 5 years, | | | | reached. |
| once you qualified for benefits, and satisfied the | | | | But... if you are pretty young (30-55) an Unlimited |
| deductible | | | | policy still might be a choice to look at. Older ages |
| (how many days of care that you need to pay | | | | will find |
| out of pocket), the insurance company will pay | | | | Unlimited years of benefits very expensive and |
| those benefits for a maximum of 5 years in this | | | | there is likely a better way to structure a policy. |
| case. | | | | So knowing the above statistics, would it make |
| The benefit period, whether a set number of | | | | more sense to you to have a Short and Fat |
| years, say 6 years for example or unlimited | | | | policy (one with a larger daily or monthly dollar |
| years are the MAXIMUM amount of time, if you | | | | benefit for a shorter period of time) verses... a |
| used your FULL chosen daily or monthly benefit | | | | smaller daily or monthly dollarbenefit for a longer |
| that your policy would pay on a claim. | | | | period of years? |
| If you had Alzheimer's for 9 years, the policy | | | | I'd put my money on Short and Fat!! |
| benefits would have been exhausted after those | | | | So if you would normally consider a policy that |
| 5 years and you would be paying for the last four | | | | pays $150 per day for 7, 10 years or an Unlimited |
| years from your own money. | | | | benefit period... you MIGHT seriously consider a |
| Most insurance companies have a number of | | | | policy that would pay $180-$200 per day for |
| benefit periods to choose from. Typically they are | | | | three to five years instead. |
| 2, 3, 4, 5, 6, 7, or 10 years OR an Unlimited | | | | No sense in paying money out of pocket during |
| benefit period (say you went on claim for 35 | | | | the 3-5 years you are most likely to remain on |
| years due to being in a wheelchair or something). | | | | claim. |
| Most LTC policies have at least four or five | | | | Keep in mind that in 20 or 30 years the |
| different benefits periods from the above choices | | | | compounded inflation policy rider will work in your |
| which you can choose from for your policy. | | | | favor by giving you much more purchasing power |
| The benefit period, whether a set number of | | | | to pay for care by starting out with a bigger initial |
| years, say 4 years for example or unlimited | | | | benefit! |
| years are the MAXIMUM amount of time, if you | | | | The odds are pretty good that the insurance |
| used your FULL chosen daily or monthly benefit | | | | company will pay more out for your care under |
| that your policy would pay on a claim. | | | | these conditions. |
| Now for the "Short and Fat" part... | | | | In an upcoming article I will tell you how many |
| Long ago there wasn't too much difference in the | | | | people can improve the odds even MORE in their |
| premium prices for a 5 year benefit period | | | | favor! |
| compared to an Unlimited policy. So since there | | | | **** Mark Jeffrey Shopping TIP: If BUDGET is a |
| wasn't much of a cost difference, many clients | | | | concern, the Short and Fat policy makes most |
| chose the Unlimited benefit to protect against a | | | | sense since only a relatively few people remain on |
| HUGE potential disaster of needing help in bathing | | | | claim for more than 5 years. I would go with the |
| dressing, etc. for DECADES -- not just a few | | | | odds and get a daily/monthly benefit that would |
| years. | | | | cover anticipated costs rather than have a smaller |
| But today, there is a much larger difference in the | | | | dollar benefit for a longer number of years (a |
| premium prices for unlimited. So what to do? | | | | Long and Skinny policy). For more LTC Shopping |
| First of all let me say that one of the largest LTC | | | | tips: |
| insurance companies has statistics that show that | | | | Since 1997, Mark Jeffrey has helped hundreds |
| only 11% of their claims last longer than five | | | | plan ahead for Long Term Care expenses using |
| years. Of course this means that about 90% of | | | | discounted LTC insurance from the top insurers & |
| the claims last shorter thanfive years. So the | | | | smart policy planning strategies. |