Chapter 7: Long Term Care Insurance

Question 1

People needing LTC (3)

Answer 1

• Old age
• Disabled from birth
• Disabled from accident/illness

Question 2

Definition of LTC

Answer 2

All forms of continuing personal or nursing care and associated domestic services for people who are unable to look after themselves without some degree of support, whether provided:

• in their own homes
• at a day center
• in a state-sponsored or care home setting

Question 3

Optimal LTC design aims to (3)

Answer 3

• regain indépendance
• slow rate of deterioration
• Provide support

Question 4

3 Costs of care

Answer 4

• Living costs (Food, clothing, heating)
• Housing (rent, mortgage)
• Personal care (looked after due to frailty)

Question 5

2 Types of LTCI

Answer 5

• Pre-funded plans

- Immediate needs plans

Question 6

Methods of funding LTC (policyholder) (4)

Answer 6

• Single prems
• Regular payments
• Restricted regular payments that either stop:
o At certain age (retirement)
o During defined level of disab (waiver of prem)
• Retrospective payment
o From equity released say after selling home

Question 7

Why guaranteeing premiums in old age may not be a problem (3)

Answer 7

• May already be claiming
• May die soon
• May start claiming soon

Less uncertainty

Question 8

Principle of indemnity

Answer 8

Return the insured to state they were prior to the event occurring

Question 9

2 Ways of charges may be made on UL design

Answer 9

• reduce units

- reduce unit price