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