An Overview of Long-term-care Insurance

What follows is a summary of information about long-term-care insurance (frequently abbreviated as LTCi). For an inexpensive brochure on buying LTCi, call the National Council on Aging at 800-373-4906. For details on rating LTCi providers' financial stability, call Weiss Ratings at 800-289-9222. For more resources on long-term care, see "Learning about LTC."

Benefits: Benefits are expressed in terms of cost per day, with the buyer selecting the amount at time of purchase (obviously, higher benefits cost more). Current payouts average $140 per day nationwide, but can exceed $250 in areas with higher living costs.


Coverage period: Buyers also decide how long they want their benefits to last; choices range from one to five years or lifetime coverage. Longer policies mean higher premiums.


Start date: LTCi companies offer an optional waiting period between the date policyholders become eligible for benefits and the date payouts actually begin. Such waiting periods, which lower premium rates, last from one month to one year; again, it's the buyer's choice.


Cost: Premiums vary based not only on the factors cited above, but also on the buyer's age at the time of purchase. Based on a recent rate survey, consultant Phyllis Shelton offers the following sample premiums for three policies providing benefits of $140 per day.

For a three-year benefit period, the annual premium is $853 if the policy is purchased at age 40, $1,039 at age 50, $1,605 at age 60, and $2,601 at age 70.

For a five-year period, the premium is $1,093 at 40, $1,316 at 50, $1,879 at 60, and $3,810 at 70.

For a lifetime (unlimited) benefit period, the premium is $1,514 at 40, $1,822 at 50, $2,625 at 60, and $5,222 at 70.


Payouts: Benefits begin when a doctor certifies that a policyholder needs help with at least two "activities of daily living," such as walking, eating, or bathing.


Those contemplating the purchase of LTCi should also remember to:

*consider what, if anything, you're willing to spend out of pocket for care and determine how much you can comfortably afford to pay for premiums.

*compare quotes from three or more companies.

*check competing insurers' ratings with respected evaluators such as Weiss Ratings Inc.

*look for "inflation riders," which increase policy values annually.

*read the fine print to determine whether an insurer can raise your premium rates down the road.      

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