A long-term care (LTC) policy is a vital protection to build into any retirement plan. LTC coverage ensures that you receive the nursing home or home healthcare benefits that you need when you are unable to complete the activities of daily living (ADLs) on your own. There're many different factors considered when developing your LTC premiums including:
Age and Health
The older you are the less time the insurance company has to collect premiums before you need to utilize your LTC benefits. It's a good idea to secure this policy well before you retire so you can save on premiums. Your health is also a factor considered when developing your LTC premium.
The benefit structure of your policy has a heavy bearing on the premium. When designing your policy you'll be asked to choose an elimination period. The policy’s elimination period is the amount of time between when you're no longer able to complete the activities daily living and when your benefits can be paid. If you choose to policy with a short elimination period, meaning that your benefits are paid out quickly after you're unable to complete the ADLs, then you'll pay higher premiums because you'll be self-insuring less of the potential care expense.
Another consideration is the benefit period. This is the amount of time benefits are paid and it can range from two years to your entire lifetime. The longer your benefit period is the more your LTC insurance company expects to be responsible to pay, and the higher your premium will be.
The benefit amount is another factor in determining your premiums. Benefit amount is the daily cost of care that your policy covers. When you design your policy you can choose a low benefit amount or a very high benefit amount. The higher your benefit, the more expensive your premiums; the lower your benefit the more likely you will have to pay out-of-pocket for some daily expenses. In addition, if you choose home healthcare coverage, you may have a higher premium.
You can add additional coverages and protections to your LTC policy by adding riders. One of the most popular riders is inflation protection, which will increase your benefit amount to compensate for rising costs. Another benefit rider you can add is a waiver of premium rider which removes the need to pay the premium once you start using the benefits.
LTC policies are not only important for everyone to carry but they're also challenging to design. Don't go it alone, give us a call at ECI Agency and together we can create an Oklahoma City Long Term Care insurance policy that preserves your legacy for your heirs and provides adequate protection for you.