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Long Term Care Insurance

Long term care insurance has become a popular way to assist individuals in providing for future long term care expenses. It offers protection that can assist in covering some or all of the costs of home care, assisted living, or nursing home care and many other related services. Long term care insurance is an affordable alternative to paying for long term care expenses from personal and family savings.


If individuals and families are concerned about any of the following they should consider a long term care insurance policy:

  • Asset Protection and Depletion. A long term care event can be expensive. The average median annual rate of nursing home care in Tennessee is $65,882 per year. This amount may be more depending on which area of the state in which you live.  If care is required for five years the costs can be over $375,000. While assisted living facilities may cost less, the average cost for assisted living in Tennessee is $36,960 per year.

  • Eliminate Burden of Care. Many individuals do not want to rely on their children or grandchildren to provide care. This can create unnecessary stress for the care recipient and the families of the caregiver, along with any potential financial assistance a care recipient may need from their children.

  • Maintain Independence. Choose how and where to receive care, including at home – where most people choose to receive care.


It is difficult to know whether you will ever need long term care, or how much care you might need. However, it is possible to realize the potential financial impact a long term care event can have on a family. Long term care insurance can reduce, and in some cases eliminate, the risk.


What Does Long Term Care Insurance Cover?


Long term care insurance provides assistance for individuals with the Activities of Daily Living (ADLs). Activities of Daily Living include bathing, dressing, eating, transferring, toileting, and continence. In addition, it provides assistance to individuals who suffer a Cognitive impairment such as Alzheimer’s disease or dementia. Long term care services generally fall into one of two categories: skilled care or custodial care.

  • Custodial Care. Custodial care is the care required to assist individuals with Activities of Daily Living.

  • Skilled Care. Skilled care covers nursing home care and/or physical, occupational, speech, and respiratory therapy performed by a licensed professional.


Within these two categories are subcategories of care, which include:

  • Home Health Care

  • Home Assistance Services

  • Assisted Living Facilities

  • Adult Day Care Services

  • Nursing Home

  • Respite Care


Some long term care insurance policies will even cover the cost of training an individual to provide proper care. This can be a great benefit for family members who prefer to provide care on a full or part time basis.


Types of Long Term Care Insurance Policies


There are three types of long term care insurance policies: reimbursement, indemnity, and cash benefit. The cost of each type of policy can vary greatly.

  • Reimbursement. A reimbursement long term care insurance policy will repay the insured for any long term care expenses incurred up to the maximum benefits specified in the policy. Benefits under this type of policy are only received when expenses are incurred. Reimbursement policies are the most common long term care insurance policies available.

  • Indemnity. An indemnity long term care insurance policy will provide you with the maximum benefits specified in the policy every day care is received, regardless of what long term care costs are incurred.

  • Cash Benefit. A cash benefit long term care insurance policy will provide you with maximum benefits specified in the policy regardless of whether care was received.


In order to receive benefits from your long term care insurance policy you must generally be certified by a licensed health care professional as being unable to complete two of six Activities of Daily Living or suffer from some type of Cognitive impairment which precludes you from being substantially able to care for yourself.


Long Term Care Insurance Premium Options


All long term care insurance policies offer the owner the ability to pay premiums on an annual, semi-annual, quarterly, or monthly basis. However, the premiums on annual basis will be less expensive than other methods, as other methods charge an additional processing fee.


In addition, when choosing how many years to pay premiums for long term care insurance most policies offer three options: level pay, ten pay, and single pay. Most long term care insurance policies include a waiver of premium features that eliminates the requirement to make premium payments when receiving benefits from the policy.


Long Term Care Insurance Underwriting


Individual long term care insurance policies require medical underwriting. This process consists of the insurance company reviewing the proposed insured’s medical records to determine whether or not they will be eligible to qualify for the coverage applied for. In addition to review of medical records, the insurance company will conduct a personal health interview (PHI). This interview is completed by phone and usually can be conducted in less than 10 minutes. If the proposed insured has not seen a doctor in two years or more the insurance company will oftentimes require a paramedical examination be completed. The paramedical examination is usually conducted by a nursed who will meet the insured at a location of their choosing. The exam will include a blood and urine sample, height and weight, along with a blood pressure reading.


When it comes to designing a long term care insurance policy there are a number of choices an individual must make. It is important to work with a company that will provide you with the expertise to assist in designing a policy that meets your long term care goals and objectives. The company you work with should also be independent and work with a number of carriers to make sure you are getting the best policies for your needs with the best premium available. To learn more please contact us for more information.

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