L1: Long Term Care Insurance Flashcards
Long Term Care Insurance
cover cost when policyholder is unable to continue living independently due to advanced age
Premiums
payable at regular intervals while insured is healthy and designed to remain same throughout term of policy.
Premiums and Insurers rights
Insurer has right to increase premium for all policyholder, usually when benefit is much higher <- require approval from regulators
Benefit triggers
triggered when policyholder cannot perform at least two of six daily activities of daily living (ADL)
ADL’s
Activities of Daily Living
Activities of Daily Living (6)
Bathing, Dressing, Eating, Toileting & Hygiene, Continuous bladder control, transferring/movement
Waiting period
90 days, commence once benefit is triggered and waiting period is over
Benefit term
2-5 years and selected by policyholder
Benefit types (2)
Reimbursement
Fixed Annuity Payment
Benefit Type - Reimbursement
made directly to caregiving organization to cover cost of providing appropriate care (in home / nursing)
Benefit Type - Fixed Annuity Payment
made to policyholder regularly during benefit term, policyholder chooses what care the benefit will appply to
Hybrid LTC & Life Insurance
Benefit paid using return of premium approach or accelerated benefit approach. Combine long term care benefits with death benefit of life contract
Return of Period
any excess of total premium paid by policyholder over total LTC benefit that they received will be “returned” to policyholder as death benefit
Accelerated Benefit
face amount of policy set at issue, LTC benefit paid from face amount (reduced overtime). If not exhausted will be paid as death benefit
Extension Benefit Rider
extend benefit paid by 2 to 5 years after face is exhausted
Off - period
determine if two periods of care are treated together or separately, usually 6 months for LTC
LTC in Japan
may be on a stand-alone basis or as a rider on a whole life insurance policy. Benefits may increase when the level of dependency increases
LTC in Germany
LTC coverage is integrated into the social health insurance provided by the government. Private LTC insurance can supplement or replace the public LTC coverage. Individuals who opt out of the state benefit also opt out of the tax supporting the benefit.
LTC in France pay benefits in form of (2)
fixed or inflation-indexed annuity.
LTC in France benefits based on (2)
Benefits may be based on “mild or severe dependency” or “severe dependency only.”
LTC in France - Benefits: Severe dependency
bedbound or chairbound, needing constant assistance, or having a cognitive impairment requiring constant monitoring.
LTC in France - Benefits: Mild dependency
conditions that require help with eating, bathing, and/or some mobility, but not being bed- or chairbound
Premiums for LTC insurance policies in France are cheaper than in the U.S (4)
- Lower benefits
- Lower risk of payment due to the more stringent requirement of “severe dependency”
- Purchase of policies through group plans facilitated by employers
- Younger policyholder ages at issue
LTC in the United Kingdom - immediate needs annuities
replaced regular premium LTC policies. Individuals pay a single premium to purchase a policy and then receive benefits as a regular fixed annuity paid directly to the care home