Question

11. Long-term care insurance provisions and costs

You’ve decided to obtain long-term care insurance and have done your homework to learn about the features of different plans. Double check your knowledge to help you select the plan that’s right for you by answering the following questions:
Many long-term care policies focus more on benefits for probably because of cost. In either case, benefits should cover care. Your financial advisor recommends purchasing a policy that provides benefits for care because .
Because you are cost conscious, you will buy a plan for eligibility for coverage. Your plan will pay benefits .
You will apply your cost conscious nature to determine your daily maximum benefit, how long your benefit will continue, obtaining inflation protection, and the waiting period.
Two policies you really like are identical except one offers a daily maximum benefit of $300 and the other’s daily benefit is $750. The premium for the $300 provision will cost the $750 provision. If you select the $300 provision and need to collect benefits, you will pay out-of-pocket expense than you would for the $750 provision.
You’ve decided to limit the duration of your benefit payments, should you even need them, to a 4 year plan, which will cost a lifetime plan. Besides the specific premium costs associated with the length of the benefit period, you based your decision on the fact that the average nursing home stay is the term of the policy you selected. That average is years.
Most policies have a waiting period before benefits begin to be paid (not retroactively). The longer the waiting period, the the premium.
The policy you’re considering offers inflation protection. Since it typically adds to the basic premium, you’ve decided not to buy the protection.
In addition to being able to afford the premium for a policy, you need to determine that you pay the out-of-pocket expenses not covered by insurance using your liquid assets.
You were glad to learn that preexisting condition clauses are now by the Patient Protection and Affordable Care Act. You’ll need to be sure to buy a policy with renewability clause so an insurer refuse to renew your coverage.
In conclusion: It’s important to learn how to choose the right policy so you’ll obtain one with coverage at a cost that .

Answer 1

Choosing the right long-term care insurance is a balancing act between coverage and cost, with the cost-conscious individual weighing decisions on daily maximum benefits, benefit duration, waiting periods, and inflation protection. Lower daily benefits mean lower premiums but higher out-of-pocket costs, while choosing a shorter duration of coverage can reduce costs in line with the average nursing home stay. It's also important to ensure the policy is renewable, given that preexisting conditions are now typically covered.

Step-by-step explanation:

When selecting a long-term care insurance plan, it's crucial to consider various features and costs that will impact your financial situation. These plans often involve important choices around daily maximum benefits, duration of coverage, inflation protection, and waiting periods.

For the cost-conscious individual, a plan offering lower daily benefits such as the $300 option presents lower premiums but higher potential out-of-pocket expenses compared to a high daily benefit plan like the $750 option. Deciding on the duration of benefits based on the average nursing home stay can also affect premiums with shorter terms such as a 4-year plan costing less than a lifetime plan.

Waiting periods before benefits kick in also play a role in the cost equation, with longer waiting periods resulting in lower premiums. While inflation protection can increase premiums, opting out of it is a gamble on future costs. Renewability is essential for ensuring continued coverage, and thanks to the Patient Protection and Affordable Care Act, preexisting conditions are less of a concern than in the past.

Looking comprehensively at these factors helps in making an informed decision on a policy that offers adequate coverage without overstretching financially.