What is Long Term Care Insurance?

Long Term Care Insurance (LTCI) is a form of insurance developed specifically to cover the costs of Long Term Care services, most of which are not covered by traditional medical insurance plans or Medicare. These benefits include services in your home such as assistance with activities of daily living (ADLs), i.e. eating, dressing, bathing, toileting, continence, and transferring. Also, this coverage is designed to pay for services and care in a variety of facilities and community settings. There are a myriad of reasons why one would want to procure this type of coverage. The protection could help ​ensure that your monthly retirement income stream will not be diverted to a home healthcare agency or long-term care facility. People purchase LTCI because they are aware of the devastating effect it has on the emotional, physical, and financial well-being of family and friends.

Traditional long-term care insurance is a standalone policy that pays for long-term care costs, such as home health care, assisted living, and personal care services. These services can be provided in a variety of settings, including your home, a community organization, or another facility.

Hybrid long-term care insurance, also known as hybrid life insurance, combines long-term care coverage with a life insurance benefit. This type of policy can help pay for long-term care costs while you're alive and provide a death benefit to your beneficiaries when you pass away.

Hybrid policies can also offer exit strategies to reduce the fear of wasting premiums. For example, after a surrender charge period (usually 10 years), you can get most of your premiums back if you decide to cancel the policy.

There are essentially four factors that determine the cost of Long Term Care policies: age, health, the amount of benefit, and the length of the benefit period. In recent years, the number of carriers in the marketplace has declined due to economic factors as well as poor claim experience. There are still several quality carriers available, as well as ways of funding these types of policies. There are life insurance policies on the market that have policy riders attached to them that create a pool of money for benefits. Like all insurance, the best advice is to get the information you need to make an informed decision.