How to Buy Long Term Care, Part Two
WHAT IS THE PROCESS OF SECURING LONG TERM CARE COVERAGE?
The process of securing Long Term Care can actually be quite simple, and contains three phases:
I. EDUCATION: Learn about Long Term Care. What is it? What does is provide? What are the limitations? You must understand that you will likely pay for Non-Skilled or Custodial Care at some point. The question is simple. Will you allow such care to deplete your personal assets or purchase a Long Term Care plan to provide for this care? You must also understand how federal and state programs may affect your decisions. In most instances, government resources will only provide Non-Skilled or Custodial Care if you meet certain minimum income, asset and physical metrics established by the state in which you reside.
II. UNDERWRITING: Can you qualify for Long Term Care through the underwriting process? You must understand the underwriting process fully, and all of the potential steps that could be involved with securing coverage. Underwriting varies by carrier; please check with your advisor on this as a result of their discussion of your medical history with you. If you are a business owner, you may wish to ask your advisor if abbreviated underwriting might be advantageous for your organization or company. The main consideration of course, is your health. Unless you have access to an abbreviated underwriting program through your employer or an organization as referenced earlier; it is likely that you will go through full underwriting with the carrier that you choose. The underwriting process for Long Term Care generally employs mechanisms in order to review the following: • Your 10 Year Medical History • Your 10 Year Surgical History • Prescriptions that you have taken or are taking
The underwriting process for individuals attempting to secure Long Term Care coverage can take 4-6 weeks. Full underwriting is a detailed process that requires an extensive medical questionnaire. Abbreviated underwriting can shorten this process requiring fewer questions and a shortened process.
III. FUNDING: Fortunately, there are several funding options available to fund your Long Term Care plan. Funding options vary by carrier and by the state in which the product is filed: Lump Sum Option consisting of one payment that funds the entire Long Term Care Plan Defined Payment Period Option setting payments over a fixed period Lifetime Pay Period Option in which you pay premiums for the remainder of your life unless you use the services
With both the Defined Payment and Lifetime Pay Period Options, your payments cease when you qualify and begin receiving benefits. Within these funding options, you may also tailor the frequency of your payments to best fit your budgetary needs by paying:
• Monthly • Quarterly • Semi-Annually, or • Annually
More frequent payments result in more premium payments and the difference between each payment frequency will vary by carrier. Your Long Term Care advisor should present a detailed process to explain all of the steps that can be involved with securing Long Term Care. You should ask to review this process prior to engaging an advisor. It is critical that your Long Term Care Advisor be informed and prepared to offer you several options in terms of underwriting, funding and plan benefits such as inflation, claims payment options and other relevant LTC planning provisions that reflect and fit your personal financial plan. When it comes to Long Term Care, one size does not fit all.
Corey Rieck is on the Caregiver Communications Board and President & Founder of Long Term Care Planning Group